Event: on the evening of March 20, the company announced its 2018 results, KuaiBao, with operating income of 43.122 billion yuan in 2018, an increase of 4.51% over the same period last year, net profit of 1.205 billion yuan, up 13.95%, and earnings per share of 2.82 yuan, up 14.17% over the same period last year.
Comments:
The income and profit of the distribution business have increased steadily. In 2018, the company's distribution business achieved operating income of 32.757 billion yuan, an increase of 3.92% over the same period last year, and net profit of 716 million yuan, an increase of 11.89% over the same period last year, compared with the income growth rate of + 0.79% and profit growth rate of + 8.93% in the first half of 2018. We believe that in 2018, the company actively responded to the "two-vote system", "GPO", pharmacy trusteeship and other factors, and the growth rate of distribution revenue and profits increased steadily, reflecting good management and operation capabilities.
Retail business revenue acceleration, strong combination is worth looking forward to. In 2018, the retail business of the National University Pharmacy achieved an operating income of 10.878 billion yuan, an increase of 8.45% over the same period last year, an increase from + 5.23% in the first half of 2018, and a net profit of 302 million yuan, an increase of 15.10% over the same period last year. As the largest pharmaceutical retail enterprise in China, National University Pharmacy is one of the few enterprises with national pharmaceutical retail network. As of the half of 2018, National University Pharmacy has 4004 stores, covering 19 provinces / autonomous regions / municipalities and entering nearly 70 large and medium-sized cities. National University pharmacy sinks in advantageous areas, increases the expansion speed of stores around the hospital, implements the strategy of wholesale and retail integration, strengthens the fine management of commercial mining, and speeds up the exploration of new e-commerce business models. According to the company's 2018 report, Guoda Pharmacy has been changed into a Sino-foreign joint venture, with 60% of its Chinese pharmacy holding 40% of its shares. We believe that as an international chain drugstore giant, the introduction of WBA as a strategic investor is expected to promote the internal operation and external expansion of National University Pharmacy.
Profit forecast and investment advice: we are optimistic about the consistent development trend of Sinopharmaceuticals, and expect that the distribution business is expected to grow steadily in the future, while the retail business benefits from wholesale-to-zero integration and war investment coordination. We estimate that in 2018-20, the company's revenue will be 431.2 yuan, 463.4 yuan and 49.95 billion yuan respectively, an increase of 4.5%, 7.5% and 7.8% over the same period last year, and the net profit will be 12.1,13.5 and 1.55 billion yuan respectively, an increase of 14.0%, 12.2% and 14.7% respectively over the same period last year. The corresponding EPS is 2.82,3.16,3.62 yuan per share. Considering that the comparable company's PE in 2019 is 20 times, we give Sinopharm uniform 19-21 times PE in 2019, with a reasonable value range of 60.02-66.34 yuan per share, with a rating of "better than the market".
Risk hint: collection of drug price reduction risk, National University pharmacy integration is not up to the expected risk.