Company announcement: the company released its semi-annual report in 2016, with revenue of 305 million yuan (- 24%), net profit of 12.61 million yuan (+ 4.14%), and net profit of 13.04 million yuan (+ 32.54%).
Strategy: take variety as the core to deepen the stable development of the layout of orthopaedics. 1) the company's pharmaceutical business is stable, with revenue of 223 million yuan (+ 35.32%) and gross profit margin of 81.94% (+ 1.42pp) in the first half of 16 years. The income of its leading orthopedic products (artificial tiger bone powder and Jintiange capsule) is 188 million yuan (+ 41%). The sales revenue of the company's pharmaceutical products is growing rapidly in East China and Southwest China. 2) due to the termination of the general agent business, the pharmaceutical business achieved 64.47 million yuan (- 70%) in the first half of the year, and the Jinhua Howson Hotel earned 16.92 million yuan (- 8.69%) in the first half of the year.
Business and hotel business will continue to remain stable in the future.
During the reporting period, the sales expense rate was 46.47% (+ 14pp), mainly due to increased market investment, including strengthening academic promotion, strengthening cooperation with international professional academic institutions, refining marketing programs, etc., promoting the sales growth of leading products by 41%; the company reduced investment in financial products, and the financial expense rate was-0.16%, which decreased compared with 15 years.
Raise no more than 963 million yuan, after the completion of the rights issue, the proportion of major shareholders will rise from 25% to 39% to show confidence in the future development of the company, in the future start around orthopaedic mergers and acquisitions, business expansion to the field of orthopaedic consumables.
The market of orthopedic instruments is growing rapidly, the degree of localization is low, and the industry integration is accelerated. The orthopedic implant market has grown from 6.74 billion in 2009 to nearly 15 billion in 15 years, with a compound growth rate of about 14%, accounting for about 5% of the domestic medical device market.
However, overseas brands occupy a large market share (about 66%), including Johnson & Johnson, Stryker, Medtronic PLC, JaimiBangmei and so on. The localization rate of trauma products is 60%, while spine and joint products are mainly imported. Changzhou Huasen products, which include trauma and spine, have a revenue of 160 million yuan and a net profit of 47.44 million yuan in 2015, which can produce synergy with the company's existing business. Watson 3D can provide orthopedic digital customized solutions for doctors and patients.
The company adheres to the strategy of taking variety as the core, focuses on the market of orthopedic traditional Chinese medicine and the field of consumables, and maintains the "overweight" rating. Artificial tiger bone powder and Jintiange capsule have a high market share. Through additional issuance and additional investment in Changzhou Huasen, the company has launched mergers and acquisitions around orthopaedic segments, and its business has been expanded to the field of orthopedic consumables. Looking at the split of the business, it is estimated that the pharmaceutical business dominated by orthopedic drugs will generate 6700 million revenue in 16 years. If the impact of Jinhua Howson Hotel business on performance is not taken into account, the current market capitalization corresponds to 52 times PE.
Taking the three businesses of the company into consideration, we estimate that the net return profit from 2016 to 2018 is 45665,5783max, 73.9m yuan, EPS, 0.15pm, 0.19pm, 0.24RMB, respectively, and the corresponding PE is 77-61-48 times.
If the rights issue is completed in the first half of 2017, taking into account the investment income of 20 per cent of Changzhou Huasen equity and the increase in equity after the rights issue, the fully diluted EPS of 16-18 years is 0.15 EPS 0.17max 0.22, and the corresponding PE is 77-68-53 times.
