1. Events:
The company issues the 2018 annual report and the 2019 quarterly report. In 2018, the company achieved a revenue of 1.213 billion yuan, an increase of 15.20% over the same period last year, a net profit of 319 million yuan for shareholders of listed companies, an increase of 5.96% over the same period last year, a deduction of 275 million yuan for non-return net profit, a decrease of 0.29% over the same period last year, and an EPS of 0.79 yuan. Ten pie 4.1 get three free.
Of this total, the company's revenue in the fourth quarter of 2018 was 357 million yuan, down 1.29% from the same period last year; the net profit attributable to shareholders of listed companies was 73.0097 million yuan, down 21.34% from the same period last year; and the net profit from non-return was 43.5531 million yuan, down 41.71% from the same period last year. Realize EPS 0.18 yuan.
In the first quarter of 2019, the company achieved revenue of 254 million yuan, an increase of 11.78% over the same period last year, a net profit of 84.7755 million yuan for shareholders of listed companies, an increase of 9.98% over the same period last year, and a net profit of 78.6085 million yuan for non-return, an increase of 1.97% over the same period last year. Realize EPS 0.21 yuan.
In terms of other financial indicators, the company's sales expenses in 2018 were 630 million yuan, an increase of 21.73% over the same period last year; management expenses were 70.3087 million yuan, an increase of 26.01% over the same period last year; and financial expenses were 8.089 million yuan, an increase of 997.82% over the same period last year, mainly due to the increase in bank loan interest and bills receivable discount expenses The R & D expenditure was 36.814 million yuan, an increase of 42.90% over the same period last year, mainly due to the company's increased efforts in new product research and development and product secondary development; the net operating cash flow was 499 million yuan, an increase of 117.29% over the same period last year. This is mainly due to the increase in cash received by the company in selling goods, providing services and discounting bills receivable. Fixed assets increased by 152.47% over the beginning of the period, mainly due to the completion of the project of the subsidiary health function food deep processing industry base project and the transfer of fixed assets.
In the first quarter of 2019, the company's sales expenses were 103 million yuan, an increase of 12.96% over the same period last year; management expenses were 20.8076 million yuan, an increase of 91.40% over the same period last year, mainly due to the increase in depreciation expenses, staff salaries, consulting fees and repair fees; financial expenses-601700 yuan, a decrease of 123.43% over the same period last year, mainly due to the decrease in interest expenses on bank loans The R & D expenditure was 5.8243 million yuan, an increase of 47.26% over the same period last year, mainly due to increased technological research and development; the net operating cash flow was-76.6547 million yuan, down 171.43% from the same period last year, mainly due to the decrease in cash received from the sale of goods and services and the increase in the payment of various taxes, resulting in a decrease in net operating cash flow.
two。 Our analysis and judgment
(1) expenses increased significantly during the period, and the growth rate of profits was lower than the growth rate of income.
Income maintained steady growth, and the increase in expenses during the period caused the growth rate at the profit end to be lower than that at the income end. In 2018, the company's revenue was 1.213 billion yuan (+ 15.20%), the return net profit was 319 million yuan (+ 5.96%), and the non-return net profit was 275 million yuan (- 0.29%). The growth rate at the profit end was lower than that at the income end. We believe that it is mainly due to the increase in the rate of expenses during the period caused by the acceleration of market expansion and increased investment in R & D. In 2018, the company's expense rate during the period was 61.42% (+ 4.47pp), of which the sales expense rate was 51.93% (+ 2.79pp), mainly due to the company's sinking to expand market coverage and increased sales expenses; the management expense rate was 5.80% (+ 0.50pp); and the R & D expense rate was 3.30% (+ 0.59pp), mainly due to the company's increased efforts in new product research and development and product secondary development, and the financial expense rate was 0.67% (+ 0.60pp).
Subdivide each product segment to see:
First-line varieties of plaster through multi-channel layout to maintain rapid growth. The sales revenue of the pillar product plaster in 18 years was 923 million yuan, an increase of 17.39% over the same period last year, with a gross profit margin of 87.76%, an increase of 0.61pp over the same period last year. We believe that it is mainly due to the sinking of marketing channels and strengthening the market penetration of public hospitals and grass-roots medical institutions, especially county-level hospitals and community health service centers (stations). At the same time, the company has explored overseas market channels.
In the second-tier varieties, pills maintain high-speed growth. During the reporting period, the company's second-line varieties of ointment + pills achieved a total revenue of 286 million yuan. Among them, the pill achieved revenue of 80.6752 million yuan, an increase of 31.59% over the same period last year, a gross profit margin of 83.99%, an increase of 3.56 ppm over the same period last year, and a revenue of 205 million yuan of ointment, an increase of 1.44% over the same period last year, and a gross profit margin of 90.02%, a decrease of 1.05pp over the same period last year.
We believe that the reason for the company's continued drug sales is that it continues to work in hospitals, grass-roots units and retail terminals.
In the hospital market, on the one hand, actively adjust the allocation of resources, continue to sink channels, speed up the development of the potential market, on the other hand, adhere to the professional drive of academic leadership, improve the academic marketing ability of the marketing team, with the help of meticulous management means, strengthen the market penetration of core products in medical endpoints. In the grass-roots market, the company actively responds to the national policy, through patient education, free clinic activities and other academic activities to increase the brand influence of products at the grass-roots level and promote the promotion of terminal sales at the grass-roots level.
In the retail market, increase in-depth cooperation with core customers, establish long-term strategic cooperation, through a variety of activities to attract more chain members to pay attention to skeletal muscle and joint pain, and further increase the market share of major cities.
As for subsidiaries, Gansu Qizheng Tibetan Medicine achieved a revenue of 91.1434 million yuan in 18 years, an increase of 25.13% over the same period last year, and a net profit of 11.2678 million yuan, an increase of 53.81% over the same period last year.
The revenue of Gansu Foge Tibetan medicine in 18 years was 54.2274 million yuan, an increase of 10.04% over the same period last year, and the net profit was 331600 yuan, a decrease of 72.40% over the same period last year.
In the past 18 years, the revenue of Tibetan medicine marketing in Qizheng, Tibet reached 1.106 billion yuan, an increase of 16.19% over the same period last year, and the net profit was-9.3566 million yuan, a decrease of 152.71% over the same period last year.
The revenue of Gansu Qizheng Tibetan medicine marketing in the past 18 years was 50.5423 million yuan, an increase of 50.06% over the same period last year, and the net profit was 700500 yuan, an increase of 108.30% over the same period last year.
(2) the strategy of "one axis, two wings and three supports" has been steadily advanced to strengthen core competitiveness.
In 2018, the company operates closely around the strategic measure of "one axis, two wings and three supports", and continues to strengthen the core competitiveness of all aspects. "one axis" is to strengthen analgesia, with analgesic products as the core, strengthen the field of analgesia, expand the grass-roots level, strengthen retail, sink channels, and enrich the pipeline of pain products. On the one hand, the "two wings" develop the second and third echelons, enlarge gynaecology, expand the field of paediatrics, explore the field of medicine and beauty, develop specialties with Tibetan medicine characteristics, and promote the treatment and use of Tibetan medicine baths; on the other hand, it starts the construction of Internet Qizheng big health marketing platform and builds a big health Internet marketing platform for Tibetan medicine. "three supports" refers to green intelligent manufacturing, innovation of traditional external governance, and activation of organizations. The company focuses on the pharmaceutical business and constantly strengthens the core competitiveness such as product advantages, brand advantages, marketing advantages, R & D advantages and resource advantages: (1) in terms of product layout, the company continues to enrich product categories and optimize product structure, accelerate the realization of breakthroughs from single variety to multi-variety and multi-gradient; (2) in terms of brand construction, the company focuses on patients and strengthens customer experience. Strengthen the interaction and communication with key customers, enhance customer stickiness and brand awareness; (3) in marketing construction, through the diversification of investment forms, reasonable overall planning of all-channel development and multi-channel coordination to further promote academic marketing. (4) in terms of R & D, the R & D expenses of 2018 and 2019Q1 were 36.814 million yuan and 5.8243 million yuan respectively, an increase of 42.90% and 47.26% respectively over the same period last year. The company is committed to promoting clinical research and development of new products and standard research of Tibetan medicinal materials, while enriching the company's product line.
(3) carrying out equity incentives and gradually improving the talent incentive mechanism
In March 2019, the company launched a restricted stock incentive plan. The plan is to grant 2.438 million restricted shares to the incentive target, accounting for 0.600% of the total share capital of the company during the reporting period, and the grant price is 14.03 yuan per share. Among them, 2.266 million shares are granted for the first time, accounting for about 0.558% of the total share capital of the company, accounting for 92.95% of the total restricted stock grant under this plan, and 172000 shares are reserved, accounting for about 0.042% of the total share capital of the company, accounting for 7.05% of the total share capital granted under this plan. Encourage 65 people, including company directors, senior managers, core managers and core business backbone. If the incentive object is the company's senior executives and core managers, the restriction condition is that the company's revenue from 2019 to 2022 is not less than 13.98,16.14,18.78 and 2.19 billion yuan respectively; if the incentive object is the backbone of the core business, the unlimiting condition is that the company's revenue from 2019 to 2020 is not less than 13.98 yuan and 1.614 billion yuan respectively. After reaching the limit release condition, the personal limit release coefficient is determined according to the performance appraisal. Our understanding of the incentive plan is as follows: (1) the incentive scope is relatively wide. This incentive target a total of 65 people, the incentive scope covers the company's directors, senior executives, core managers and core business backbone, the incentive scope is more extensive. (2) it aims at arousing the enthusiasm of talents, effectively combining the personal interests of shareholders, companies and operators, and promoting the long-term development of the company. Compared with the company's revenue performance this year, the deregulation conditions are not strict, and it is a high probability event to complete the performance assessment on time, whose actual purpose is to mobilize the enthusiasm of the incentive object, bind the personal interests of the core team with the development of the company, and improve operational efficiency. At the same time, it also shows that the company attaches importance to talents, which will help to attract more talents. (3) incentive amortization expenses have little effect on performance. If granted in March, the corresponding amortization expenses from 2019 to 2023 are 1419.1 yuan, 1001.2 yuan, 502.2 yuan, 225.9 yuan and 313000 yuan respectively, totaling 31.797 million yuan, which has little impact on performance, and the performance release brought by equity incentives is much higher than the increase in amortization expenses.
3. Investment suggestion
The company is the leader of Tibetan medicine, looking forward to the future, the first-line variety of Xiaotong paste is expected to rely on perfect sales channel layout to maintain rapid growth; the second-line variety of ointment and pills are expected to continue to develop, through large hospitals, base drugs, retail three-wheel drive to achieve rapid growth. In addition, the company vigorously promotes brand building and enriches the product category structure, and the future development is worth looking forward to. It is estimated that the net profit from 2019 to 2021 is 458 million yuan for 3.64 pound 412 pound, and 1.13 yuan for the corresponding EPS of 0.90 pound 1.02 pound, and the corresponding PE is respectively times that of 30-27-24. Maintain the "cautious recommendation" rating.
4. Risk hint
Risk of drug price reduction, the progress of new product market promotion is not as expected.
