Event: when the company released its annual report for 19 years, the income, net profit and non-return net profit were 2.451 billion, 323 million and 315 million respectively, which were + 8.25%, + 32.48% and + 30.09%, respectively, in line with our expectations. Excluding the influence of investment income and interest income, the profit is about 23% compared with the same period last year. The comments are as follows:
Under the high base, 19Q2 performance maintained rapid growth. 19Q2's revenue, return profit and non-return net profit are + 3 per cent, + 31 per cent and + 27 per cent respectively compared with the same period last year. Under the high base of 18Q2, the company's revenue grows steadily and profits grow at a high speed through cost control. The market previously held a conservative attitude towards the company's performance growth, giving the company a lower pe valuation, while the 19Q2 company's performance continued to grow on a high base, and the performance continued to be gradually realized. We judge that the company's valuation has room for improvement.
OTC revenue is growing steadily. 19H1 China and Jiangxi Renhe Pharmaceutical have year-on-year revenues of + 3 per cent and + 12 per cent respectively, and profits of + 18 per cent and + 38 per cent respectively. We estimate that 19H1 OTC revenue is about + 10% year-on-year, maintaining a rapid growth rate under the high base of 18H1.
Control sales expenses to improve profitability. The gross profit margin of the company 19H1 is basically the same as the same period last year; the sales expense rate is 16.92%, which is-2.95% compared with the same period last year. The rate of management expenses is 7.48%, which is + 1.31% compared with the same period last year. The R & D expenditure is 18.15 million yuan, which is + 40% compared with the same period last year.
Operating net cash flow and accounts receivable improved significantly. The operating cash flow of 19H1 is 249 million yuan, about 40% more than the same period last year. We previously judged that the poor operating net cash flow of 19Q1 is related to the business cycle, and the operating net cash flow of 19Q2 has improved significantly, which proves our judgment. At the same time, the company's accounts receivable at the end of 19Q2 is 605 million, which is significantly lower than that of 717 million at the end of 19Q1, indicating that the company's income is growing rapidly and the payback is good at the same time, which indirectly proves that the terminal turnover is good.
Maintain the "highly recommended-A" rating. We estimate that the growth rate of the company's homing net profit from 2019 to 2021 will be 26%, 20% and 17%, respectively, and the corresponding EPS will be 0.51 and 0.62, respectively. As a leading enterprise of OTC, with rich variety and strong brand, the company ushered in the era of OTC terminal sales control after the formation of the push team, and sales are expected to maintain rapid growth; 19Q2's performance continues to grow high on the high base, and the performance is sustained gradually, corresponding to the 19-year pe valuation of 15x or so, we judge that there is room for improvement in the company's valuation and maintain a "highly recommended-A" rating.
Risk tips: product sales are not up to expectations, product quality and regulatory risks.