The performance is in line with expectations and is expected to maintain a low growth rate for the whole year. The company released its 2017 semi-annual report, with operating income of 933 million yuan during the reporting period, an increase of 5.49% over the same period last year, and a net profit of 194 million yuan, an increase of 1.59% over the same period last year, corresponding to 0.18 yuan of EPS. The company's main product Tanreqing injection declined in the second half of 15 years and gradually stabilized in 16 years. At present, 17H1 sales remain stable. Tanreqing injection was newly increased in the adjustment of medical insurance catalogue in 17 years to limit the use of critically ill patients in secondary and above medical institutions. However, we believe that Tanreqing injection has passed the low point of growth and entered a state of slow growth, and it is expected that the annual performance will continue to grow at a low rate.
The main product Tanreqing will become a series of products to promote the company's performance growth. The company actively promotes the secondary development of the main product Tanreqing and the research and development of a series of varieties. At present, the company is carrying out a re-evaluation of the effectiveness of Tanreqing injection in 10,000 cases to study the use of drugs in elderly patients with COPD and children; at the same time, it is also carrying out a study on the effect of Tanreqing injection on clinical resistance to drug-resistant strains. In terms of series products, Tanreqing capsule has been on the market for 15 years, the oral liquid is in the Ⅲ phase clinical study, and the children's dosage form is improving the supplementary examination and approval opinions. We believe that the formation of a series of Tanreqing products will effectively promote the company's performance growth.
The product reserve is rich, or it will enter the harvest period. In recent years, the company has successively obtained Youxinding capsule, Dinggui Oil soft capsule, Shufeng Zhitong capsule, Huadan Anshen mixture and other new drugs under research. At present, Youxinding capsule is in the stage of IIb clinical research, and the other varieties are in Ⅲ phase. In addition, the company increased funding for Shanghai Yizhong Biology at the end of the 15th year to jointly develop "paclitaxel micelles for injection"; in 16 years, the company increased funding for Shanghai Goebard Biology and won the preemptive right to "laminin for injection"; the above two drugs are in phase Ⅲ clinical trials. We believe that the company is studying a relatively rich product line, and most of them are in the late clinical stage, or will soon enter the harvest period.
Financial forecasts and investment suggestions
We expect the company to achieve a net profit of 293pm 308max in 2017-2019 (the original forecast for 17-19 years is RMB339 million in net profit), corresponding to an EPS of 0.27max, 0.29max, 0.30, with reference to the company's average valuation, giving the company a 17-year price-to-earnings ratio of 33 times, corresponding to a target price of 8.91m, maintaining the company's "buy" rating.
Risk hint
If the listing progress of the variety under research is not as expected, it will have a negative impact on the growth of the company.