Incidents:
The company released its 2016 annual report, achieving annual revenue of 302 million, an increase of 38.81% over the previous year; Guimu's net profit was 57.04 million, an increase of 10.86% over the previous year. At the same time, the company announced the 2016 profit distribution plan, which plans to distribute a cash dividend of 2.5 yuan (tax included) for every 10 additional shares transferred to all shareholders.
Reviews:
Revenue is growing faster. (1) Vigorously promoted sales of solid-formulated full-line products, and the company's full-line product service increased significantly. In 2016, the company's pharmaceutical sales revenue was 256 million, accounting for 84.6% of total revenue (79.6% in 2015), an increase of 47.8% over the previous year; (2) The initial fund-raising project in Nanjing was successfully implemented, and production capacity was released.
The main reason why the company's profit growth rate was lower than the revenue growth rate was: on the one hand, the GMP transformation was completed, competition in the industry became more intense, and the gross margin level fell 1.3 percentage points to 50%. On the other hand, due to the expansion of sales scale, the company's sales expenses ratio increased 2.2 percentage points to 11.4%.
Actively invest in mergers and acquisitions to steadily advance the layout of the entire industry chain
1) Actively expand and improve the industrial chain. In 2016, the company acquired Canaan Kaixinlong and added a new capsule filling series for the molding process, the acquisition of Canaan Xiaojiang added an aluminum-plastic packaging series for the packaging process, invested in the water treatment equipment series for Shanghai Kaixian refill fluid preparation equipment, and invested in the Canaanite bottle series for the packaging process. At present, the company's products have basically covered the entire production process of solid formulation pharmaceutical equipment, and it is already initially possible to provide pharmaceutical companies with overall solid formulation solutions. 2) Steadily advance the big health strategy. The company has formulated the strategic goal of “integrating two wings”, combining its own advantages, targeting the field of food and health product production equipment, and has accumulated high-quality customers such as Tomson Beijian, Xiang Piaopiao, Amway, Perfect, Hoheng Yuan, and Wrigley.
Revisions to earnings forecasts, investment ratings and valuations
The company is one of the few domestic suppliers that can provide complete line equipment and solutions for the three types of pelletizing processes. The current market capitalization is only 3.8 billion, and it is the only target for A-shares in the industry, so it is extremely likely that outreach will continue to develop in the future. Optimistic about the company's growth prospects, we predict that the company's EPS for 17-19 will be 0.53 yuan, 0.65 yuan, and 0.81 yuan respectively, and the target price is 34.00 yuan, maintaining the “increase in holdings” rating.
Risk warning:
Downstream pharmaceutical industry policy risks; risk of increased competition; risk of extension development falling short of expectations