Events:
Qizheng Tibetan Medicine released its 2019 annual report: in 2019, the company achieved operating income of 1.403 billion yuan, an increase of 15.62% over the same period last year; net profit of 364 million yuan, an increase of 14.27% over the same period last year; and net profit of 303 million yuan, an increase of 10.01% over the same period last year.
Comments:
The performance is growing steadily, and the company's strategy continues to advance. In 2019, the company carried out business around the strategy of "one axis, two wings and three supports", consolidated the leading position of the core product Xiaotong paste industry, took advantage of brand advantages to accelerate the layout of new products, and the medical market and retail market grew steadily. The core product plaster is growing steadily, and the ointment based on "Bai Mai Ointment" is on the rise and growing rapidly.
Clinical research and development continues to advance, category reserves continue to be enriched. During the reporting period, the company continued to implement the pain integration strategy, strengthening the research and development of new products and the secondary development of classic products, with an annual R & D investment of 64 million yuan, an increase of 31.67% over the same period last year. At present, the clinical study of Zutang granule is in the stage of clinical study, the clinical study of Zhengru paste is completed, and the clinical study of phase II, such as Xia Sade capsule and Xiaotong aerosol, is being carried out in an orderly manner. In addition, the company actively promotes international cooperation and has completed projects such as the construction of a technical platform for elastoviscous testing of topical preparations in cooperation with MIT, and continues to carry out new technology cooperation research.
Equity incentives are implemented and performance growth is expected. In 2019, the company implemented an equity incentive plan for core managers and backbone of the sales business, with the condition that the company's revenue from 2019 to 2022 was not less than 13.98,16.14,18.78 and 2.19 billion yuan respectively, and the corresponding annual performance growth rate was not less than 15%, 15%, 16% and 16%, respectively. The company's equity incentive plan has a wide audience, which is conducive to the long-term development of the company.
Profit forecast: considering the steady growth of the company's core paste products, the ointment is in the rising period, the growth flexibility is large, the equity incentive audience is wide, and the company's future revenue growth is highly deterministic. The EPS of the adjusted company from 2020 to 2022 is 0.79,0.91 and 1.05 yuan respectively, and the corresponding PE is 24x, 21x and 18x respectively. According to the 2020 PEG of 2.0X, corresponding to PE of 29X, adjust the target price to 22.90 yuan, maintain the "overweight" rating.
Risk tips: terminal promotion is not up to expectations, research and development progress is not up to expectations, bidding price reduction risk.
