The main performance is steady: the company is mainly engaged in the research and development, production and sales of proprietary Chinese medicine, and the treatment scope of the products is mainly cardio-cerebrovascular diseases. the main products include Shengmai injection, Zhenyuan capsule, Xinyue capsule, Qingkailing injection, Guifu Dihuang capsule and so on.
In recent years, centering on the development strategy of "building the whole industry chain of ginseng", the company has gradually established six plates, such as ginseng planting, ginseng processing, medicine, ginseng health products and food, cosmetics and bee products, which link up with each other and develop together.
Ginseng planting will enter the harvest period next year: the company currently has a ginseng planting area of more than 6000 mu, and plans to increase at an annual rate of 2000 mu in the future. The planting area of the company failed to reach 2000 mu in the past year, mainly because the problem of seed breeding has not been solved. The problem of ginseng seed breeding has been solved since this year, and it is expected that the planting area of ginseng will be increased by nearly 2000 mu this year, and an additional 2000 mu of planting area will be achieved in the future. There is no ginseng output this year because the company did not plant ginseng in 2009. It is estimated that it will produce 270mu of ginseng next year, 700mu in 2017, more than 1000 mu in 2018 and 1400-1500 mu in 2019.
The pharmaceutical business is the same as last year: we expect the company's capsule product revenue growth this year to be offset by a decline in injection sales, and the company's pharmaceutical business as a whole is expected to remain the same as in 2014. It is estimated that Zhenyuan capsule is expected to achieve an increase of 15% by 25%, Xinyue capsule is expected to achieve an increase of 25%, Qingkailing injection is expected to reduce revenue by 35% and 45%, and Shengmai injection is expected to decrease by 5% and 10%.
The cosmetics business exceeded expectations: we estimate that the company's current sales revenue is about 8000-90 million. We believe that the sales revenue of the company's cosmetics business is expected to exceed 100 million yuan this year, with a terminal market of about 20-250 million yuan, but it is still in the market promotion period. This year's profit will be offset by promotion expenses, next year is expected to make a profit, and the profit margin is expected to reach 30%.
For Standard Snow Show, there is a lot of room for growth: Sulwhasoo's sales in the Chinese market in the first half of 2014 were 216.4 billion won (about 1.2 billion yuan), and we estimate that Sulwhasoo's total revenue in the Chinese market in 2014 will be about 5000-650 billion won (about 28-3.6 billion yuan). Amore Pacific aims to achieve total sales of 12 trillion won (66.9 billion yuan) by 2020, with overseas markets contributing 50 percent, of which the Chinese market aims to achieve 3.3 trillion won (about 18.4 billion yuan) in sales. It also contributes 28% of total global sales; at the same time, total domestic and foreign sales of Sulwhasoo increased to 1.6 trillion won (about 8.9 billion yuan) by 2020.
Profit forecast and valuation: we forecast that the operating income of Yisheng Pharmaceutical Co., Ltd. from 2015 to 2018 is 1.13 billion, 1.41 billion, 1.7 billion and 2.03 billion yuan respectively, and the net profit attributed to the parent company is 120 million, 210 million, 300 million and 410 million yuan respectively. The EPS from 2015 to 2018 is 0.36,0.64,0.92 and 1.24 yuan respectively, and the corresponding dynamic price-to-earnings ratio is 43.8,34.4,16.9 and 12.6 times, respectively. Centering on the development strategy of "building the whole industry chain of ginseng", the company gives full play to the synergy of ginseng planting, ginseng processing, medicine, ginseng health products and food, cosmetics, bee products and other major plates to promote the common development of each plate. Ginseng processing plate has become a new profit growth point, the performance of cosmetics sector is higher than expected, the company is expected to make use of Jilin Province to vigorously develop ginseng industry to achieve rapid growth in the future. Considering the company's layout of the whole ginseng industry chain, the extension expectation is strong, so we give the company a "buy" rating.
Risk tips: market risk, bidding price reduction risk, ginseng price fluctuation risk.
