Introduction to this report:
We believe that the company's pharmaceutical business will build new growth points in multiple directions, reduce leverage in traditional industries, provide flexibility in the financial sector, and benefit from the normalization of environmental protection and revitalization in Northeast China, and the building materials business will improve.
Key points of investment:
The “increase in holdings” rating was covered for the first time. We are optimistic that the company's cement sector will benefit from infrastructure repair shortfalls, improved regional supply and demand patterns, and continued development in the pharmaceutical sector. We gave the company an EPS forecast for 2019-2021 of 0.1, 0.12, 0.14 yuan. We gave the company a target price of 5.54 yuan, covering the “increase in holdings” rating for the first time.
The layout of the entire pharmaceutical industry chain has been deepened, and new growth points have been built in multiple directions. The company's pharmaceutical sector has opened up a “research-production-marketing” industry chain layout, and has enhanced its comprehensive strength through gradual deepening investment. The successful entry of “Sanichi Capsule” into medical insurance is expected to accelerate the expansion of sales channels and achieve revenue growth.
Jilin Pharmacy's acquisition of Beijing Yongan Fuxing and incorporating the century-old “Yongantang” brand and the establishment of the online Tmall Jingdong flagship store will accelerate the business growth rate of the company's retail pharmacies and improve the new business model of “physical store+online sale+free drug delivery+wholesale”.
Traditional industries tend to improve and are gradually being deleveraged. The cumulative growth rate of cement production in Northeast China from January to May 2019 was 21.54%. After the National Assembly session, regional demand changed the downward trend of the past few years, and infrastructure helped demand rebound. At the same time, there is a new normal on the supply side where production is peaking at environmentally friendly production limits, and the cement supply and demand pattern may be improving. Real estate, as the main sector of the company's debt growth after 2009, has changed its strategy to reduce leverage.
Holding brokers+participating banks are highly flexible. The company holds 30.81% of the shares in Northeast Securities and is the controlling shareholder; Bank of Jilin holds 9.96% of the shares. The financial sector has a high degree of upward elasticity. By expanding the scale of development of the financial industry, the company cultivates new profit growth points.
Risk warning: Domestic currency and real estate macroeconomic policy risks.
