Company dynamic events

On October 14, the company issued a forecast of third-quarter results.

Comments on matters

Forecast for the third quarter net profit increased by 25-45% compared with the same period last year.

The company issued a forecast of third-quarter results, which is expected to achieve a net profit of 4467.86-51.8272 million yuan belonging to shareholders of listed companies from January to September 2016, an increase of 25-45% over the same period last year, with a significant increase in net profit growth.

The main business of conservation equipment has warmed up, and the launch of new products has helped.

Since the beginning of this year, with the full liberalization of the second child, the vigorous development of the private medical service industry and the implementation of graded diagnosis and treatment, as well as the company's continuous promotion of technological innovation, and actively adjust the market strategy according to the changes in the market environment, continue to optimize the product structure, so that the company's management level and operational efficiency have been further improved, the company's traditional conservation equipment sales have been strengthened, performance has picked up.

In June this year, the company's high-end product YP-3000 two-in-one baby incubator received a "product registration certificate" issued by CFDA. The characteristic of YP-3000 two-in-one infant incubator is that it integrates the functions of incubator and radiation heating table, which is the first in China. Abroad, only several advanced enterprises such as Astro Boy in Japan have realized the synthesis of incubator and radiation incubator technology. This technology will greatly improve the accuracy of clinical diagnosis and treatment in time and space, and has a great prospect of clinical application. This product has applied for many patents. After the successful listing, it fills the gap of such products in China.

At present, the average selling price of the company's products is about 10,000 yuan per unit, of which the price of some high-end products can reach 100,000 yuan per unit, and the gross profit margin is also higher than that of ordinary middle-end products. The company's high-end products include the YP-2005 and YP-2008 baby incubators, which were launched in 2014, and the YP-3000 two-in-one baby incubator approved this year. At present, high-end products account for about 40% of the company's sales. in the future, the company will further effectively improve the company's profitability by upgrading products and increasing the proportion of sales of high-end products.

In terms of sales, the domestic market benefits from the liberalization of the comprehensive two-child policy, and the demand for conservation equipment products will continue to grow. on the other hand, with the ultra-high performance-to-price ratio of high-end products compared with similar foreign products, the company will gradually achieve import substitution. further grab more market share. In terms of overseas sales, the company adjusted its sales strategy and increased its sales efforts in overseas markets. this year, it began to arrange special international marketing personnel to take the initiative to negotiate with foreign businessmen. In the first half of the year, the company's overseas sales revenue reached 32.9424 million yuan, an increase of 29.65% over the same period last year. In the future, the company will continue to strengthen the development of key overseas markets.

The stapler business of subsidiary companies continues to advance.

In May 2015, a number of stapler products of Ningbo Ville Kaidi Medical device Co., Ltd., a wholly-owned subsidiary of the company, obtained the "Medical device Registration Certificate". At present, the company's stapler has been officially put into mass production, and the maximum annual production capacity is expected to reach 200000 sets. The existing products are located in the middle end, and the pricing is between general domestic products and imported products, mainly open surgery stapler. In the future, there are plans to set foot in the field of high-end endoscopic stapler and form the development trend of import substitution.

At present, the sales of the company's stapler products at home and abroad are steadily advancing. In terms of domestic sales, the company has participated in bidding work in 8-9 provinces and cities, such as Eastern three provinces and Shandong Province; in terms of overseas sales, the company has participated in a number of overseas exhibitions for product promotion, and has been in contact with a number of foreign dealers. The follow-up company will continue to strengthen the market promotion of stapler products.

With its experience and channels in R & D, production and sales accumulated for many years in the medical device industry, the company is expected to quickly establish a brand in the stapler industry, seize the market, and create a new profit growth point. and help the company to alleviate the risks brought by a single type of business, we expect that the company's stapler business is expected to reach an annual sales income of 300 million yuan in 3-5 years.

Risk hint

Corporate risks include, but are not limited to, the following points: the sales of new products are not as expected; the slow progress of products under development; and the risk of entering new areas.

Investment suggestion

Maintain a "cautiously overweight" rating for the next six months

It is estimated that the EPS will be 0.19,0.24 yuan in 16 and 17 years. Based on the closing price of 23.03 yuan on October 13th, the dynamic PE will be 119.87 times and 95.64 times respectively. The average price-to-earnings ratio of 16-year price-to-earnings ratio of listed companies in medical device industry is 75.55 times and 55.15 times respectively, and the PE of companies is higher than the industry average level. The company continues to increase investment in research and development, through product upgrading to improve its competitiveness, the listing of high-end new products not only enriches the product line for the company, but also is expected to achieve import substitution by virtue of high performance-to-price ratio; subsidiary stapler products are expected to become a new profit growth point after the formation of large-scale production and sales. Policy dividends such as comprehensive second child, graded diagnosis and treatment, and encouraging social capital to run medical services are expected to directly boost the demand for the company's products and further open up the market for the company's development. We are optimistic about the development of the company for a period of time in the future and maintain a "prudent overweight" rating.