Main points of investment
The adjustment of the product structure of traditional Chinese medicine oral liquid and other products reduced the overall net profit: in 2015, the company realized operating income of 1.017 billion yuan, down 18.88% from the same period last year; the net profit of shareholders belonging to listed companies was 5.557 million yuan, down 82.65% from the same period last year; the net profit of shareholders belonging to listed companies was 4.0212 million yuan, down 86.82% from the same period last year. In 2015, the company adjusted the product structure of the parent company's main products such as traditional Chinese medicine oral liquid, reduced the production and sales of low gross margin products, and strengthened the market development of new products with high gross margin. At the same time, the company raised the ex-factory prices of most of its products. Affected by the digestion of original market inventory, product conversion and bidding in major markets, the company's sales income and net profit of traditional Chinese medicine oral liquid products declined significantly in 2015.
The business of prepared pieces of traditional Chinese medicine is developing rapidly: in March 2015, the company completed the delivery of all assets of Tongjuntang, and all assets and business of Tongjuntang were merged into listed companies. In 2015, Tongjun Hall realized sales revenue of 525 million yuan and net profit of 43.3448 million yuan, exceeding the expected performance commitment. At the same time, in order to support the development of Tongjuntang, the company changed part of the fund-raising investment projects, increased 115 million yuan to Tongjuntang for the construction of Tongjuntang marketing network project, supported Tongjuntang to open up the Henan market, and expanded the ability of decocting medicine service and slice distribution. Tongjuntang Zhengzhou decoction center industry has been completed and started operation.
Research and development strength has greatly improved: in 2015, Beijing New leading officially became a wholly-owned subsidiary of the company, and the company's R & D strength has been fundamentally improved. In 2015, the new leader achieved sales revenue of 74.0705 million yuan and a net profit of 29.2281 million yuan. At the same time, in order to support the new leader in developing clinical CRO business, the company has added 20 million yuan to the new leader. In 2015, the new leader obtained 30 clinical approvals, began to apply for 4 production approvals and applied for 16 patents.
At the beginning of the big health industry: the Huai yam beverage developed and produced by Jiaozuo Huaipai Beverage Co., Ltd., a subsidiary of the company, has been put on the market and sold. After listing, the product has achieved good market response and consumer reputation.
Implement the development strategy of "one core and two wings": in 2015, the company fully implemented the strategic thinking of "one core and two wings" and completed the merger and reorganization of 100% equity of Beijing Xinqian and 49% of Tongjuntang. Tai long Health has participated in the establishment of pharmaceutical and health-oriented industrial funds and has begun to invest in the project.
Profit forecast and investment rating: we expect the company to achieve operating income of 1.4 billion, 1.614 billion and 1.771 billion in 2016-2018, and realize net profit belonging to listed companies of 93 million, 109 million and 122 million respectively, with corresponding EPS of 0.16,0.19,0.21 and PE of 54.0,45.5,41.1 times respectively. Although affected by the product structure and price adjustment, the company did not complete the 2015 profit forecast, but considering that the company's product structure adjustment is coming to an end, at the same time, Tongjuntang and Xinqian are in a period of rapid development and the company has a strong expectation of extension mergers and acquisitions, we are still optimistic about the long-term development of the company in the future. Therefore, we maintain the company's "overweight" rating.
Risk tips: industry policy risk; product price fluctuation risk; market risk; R & D failure risk.