Event: the company released its three-quarter report in 2015, with revenue of 2.349 billion, net profit of 162 million and net profit of 147 million in January-September, up 14.05%, 0.15% and 0.77% respectively over the same period last year. Q3 revenue 781 million (+ 15.21%), net profit 46 million (- 11.94%), net profit 47 million (+ 30.39%), January-September EPS0.32 yuan, slightly lower than expected.
Comments:
1) the growth rate of the pharmaceutical sector is under pressure. With the slowdown of national economic growth and the deepening of health care reform, medical insurance control fees and bidding price reduction have become the new normal. The company's pharmaceutical business is under certain pressure. It is estimated that the pharmaceutical business will grow by about 10% over the same period last year. The core variety Mailuoning is traditional Chinese medicine injection. Under the pressure of medical insurance control fees, revenue and gross profit margin are expected to decline, which lowers the performance of the entire pharmaceutical sector. It is expected that in the later stage, under the background of accelerated bidding progress, the company will take certain price maintenance measures to protect profit space.
2) the rapid growth of medical services and the continuous improvement of profitability. Thanks to the good development of the three holding general hospitals, the company's medical services sector is growing rapidly, with revenue expected to grow by about 40% in the first three quarters and gross profit margin rising further. Suqian Hospital (Grade III B) is expected to have revenue of 620 million (up about 10 per cent) and net profit of about 80 million (up about 20 per cent); Yizheng Hospital (second Class A) has revenue of about 190 million (up about 15 per cent) and net profit of 9.5 million yuan per month (up about 25 per cent). As the integration process comes to an end, the impact of depreciation and amortization is gradually weakening, and the net interest rate is expected to increase significantly. Anqing Hospital (Grade II Class A) merged in 2014, with an estimated revenue of 160 million yuan and a net profit of 11 million yuan. With the acceleration of the integration process, Anqing Hospital is expected to follow the pace of relocation hospital and Yizheng hospital and embark on the road of rapid growth. With the continuous growth of medical services and the continuous improvement of profitability, the company is expected to create two profit platforms of pharmaceutical production and marketing and medical services at the same time, and the continuous increase in the proportion of medical services is also conducive to improving the overall valuation of the company.
3) the model of "Jinling + Drum Tower" is set up. The company successfully applied the cooperation mode of "Jinling + Gulou" (Jinling provides capital and holding, Gulou shares and exports technology and management) to Suqian Hospital, and successfully copied to Yizheng Hospital and Anqing Hospital. Jinling played an important role in building the medical brand in Jiangsu, and provided support for the company's continuous efforts to expand medical services, and set an example in the industry.
Valuation rating: the company is actively building two profit platforms for pharmaceutical production and marketing and medical services, and the hospital has a strong driving force for growth. With the help of the "Jinling + Drum Tower" model, there is a strong expectation of extension in the field of medical services, and there are expectations of state-owned enterprise reform. Slightly downgrade 15-17 years EPS to 0.44,0.52,0.61 yuan, corresponding to PE is 38,32,27 times, maintaining the overweight rating.
Risk hint: the growth rate of drug business continues to slow down, and the uncertainty of the extension time of medical services.
