We write this report to answer the following three questions for investors: why focus on complementary proprietary Chinese medicines? Why do you pay attention to Ziguang Guhan? Why didn't Ziguang Guhan perform well in the past ten years? Combined with the catalytic factors of the current time and medium-and long-term logic to form our recommendation to the ancient Han of Ziguang.
First, why pay attention to tonifying proprietary Chinese medicines? 1. The market capacity of tonifying proprietary Chinese medicines is large, resulting in a number of large products. 2. The aging of the population and the enhancement of self-care awareness expand the demand for tonifying proprietary Chinese medicines.
Second, why pay attention to the ancient Han in Ziguang? The main reason lies in the improvement of the company's variety base and operation. 1. Ancient Han people keep good health: the treasure of traditional Chinese medicine, which has the potential to become a national brand. The exclusive variety and leading product of Ziguang Guhan, Guhan Health-preserving essence, is a secret variety of traditional Chinese medicine in tonifying proprietary Chinese medicine, which comes from the bamboo slips medical book "Health-preserving prescription" unearthed from the Western Han Dynasty Tomb in Mawangdui, Changsha. It has a profound cultural heritage, proven health-preserving efficacy and accumulated market reputation over the years, and has the potential to become a national brand. Ancient Han health care is applicable to a wide range of people, the company is currently mainly located in the health care of the middle-aged and elderly, China's aging population will expand the ancient Han health care demand space. 2, thick accumulation waiting for thin pay, price increase, deep ploughing in the province, and expansion outside the province are expected to increase profits. In 2013, the sales revenue of Guhan health care series reached 260 million yuan, and the sales in the first half of 2012 reached 130 million yuan, which may be at the critical point of great-leap-forward development. The maximum retail price limit of Guhan Health Fine in Hunan Province will be increased by 46% from May 15 this year, and the price increase at retail terminals will be gradually reflected. If the price increase of Guhan Health Care essence at the retail terminal and the sales expansion outside the province can be carried out smoothly, the company's profitability will be significantly improved. 3. Guhan Health Fine contribution Company has a gross profit of nearly 95%, and its leading position is becoming increasingly prominent.
Third, why Ziguang Guhan did not perform well in the past decade? 1. The strategy is not clear and it is blindly diversified: in the past decade, Ziguang Guhan expanded blindly with a small profit base and no corresponding talent reserve. As a result, the energy was scattered, the core business was not outstanding, and the performance was poor. 2. In the past, the control was unfavorable, and there were problems with corporate governance: in August 2009, the company was put on file by the Shenzhen Stock Exchange for inspection, and on July 24, 2013, the Shenzhen Stock Exchange made a punishment decision: to publicly condemn the Ziguang Guhan and the relevant parties and notify the punishment of criticism.
Catalytic factors and recommendation logic: recent catalytic factors: the sales revenue of Guhan Health essence reached 260 million yuan in 2012, which is at the critical point of great-leap-forward development; the maximum retail price limit of Guhan Health essence in Hunan has been raised by 46% since May 15, 2013. the expansion outside the province is in progress, bringing the flexibility of the company's performance. In the first half of 2013, Guhan Health Fine contributed 77% of its revenue and 95% of its gross profit, playing an increasingly prominent role in the company's business, helping to improve the company's valuation. Medium-and long-term recommendation logic: we are optimistic that the exclusive variety of Ziguang Guhan and the leading product Guhan Health preserving Jing, as a secret variety of tonifying proprietary Chinese medicine, have profound cultural heritage, proven health-preserving efficacy and accumulated market reputation over the years, and have the potential to become a national brand.
Profit forecast and investment advice: due to the uncertainty about the loss of the company's western medicine business and the ability to expand outside the province, we conservatively forecast that the net profit from 2013 to 2015 will be 55 million yuan, 68 yuan and 86 million yuan, respectively, down 60.32% from the same period last year, an increase of 25.31% and 25.75%, corresponding to EPS of 0.24,0.31,0.39 yuan. Taking into account the nature of the company's resource-based pharmaceutical companies, and the current profit may be in the inflection point from decline to rise, it is recommended to give a valuation premium. According to 2013PE60 × and 2014PE50 ×, the target price range is 14.40-15.50 yuan, and the "overweight" rating is given for the first time.
Risk factors: Western medicine assets continue to lose money, which may continue to drag down the company's performance in the future. The sales capacity of Ziguang Guhan's expansion outside the province is still uncertain.
