Event
The company disclosed its semi-annual report for 2017: the first half of the year realized operating income of 1.951 billion yuan (+ 13.08%), net profit of 184 million yuan (+ 6.54%), net profit of 171 million yuan (- 3.36%) and EPS 0.23 yuan.
Main points of investment
1. The drug growth rate is steady, and the medical service is growing rapidly.
In the first half of 2017, the revenue was 1.951 billion yuan (+ 13.08%) and the net profit was 184 million yuan (+ 6.54%). In terms of business, the company's revenue from prescription drugs was 1.515 billion yuan (+ 6.15%), of which: antineoplastic drug income was 936 million yuan (- 0.99%), cardiovascular and cerebrovascular drugs was 238 million yuan (+ 12.19%), and gynecological drugs was 179 million yuan (+ 37.96%). The income of OTC products is 76.1317 million yuan (- 32.10%). The company vigorously distributes medical service business and achieves rapid growth, with medical service income of 359 million yuan (+ 93.22%). The company's gross profit margin was 73.47%, down 6.2pp from the same period last year, mainly due to the merger of Chaoyang Hospital, which increased the operating cost by 100 million yuan from January to April, thus affecting the company's short-term profitability. In terms of period expenses, the sales expense rate, management expense rate and financial expense rate were 50.46%, 8.15% and 1.78% respectively, which decreased 3.72pp, 0.47pp and increased 0.11pp respectively compared with the same period last year. The company's fine marketing management has achieved effective control of sales expenses.
two。 Speed up the layout of medical services and is expected to continue high growth
During the reporting period, the company continued to expand the layout of medical services, with a number of hospitals such as Guannan Hospital, Chaoyang Hospital and Bijie Hospital, with 1380 beds approved; invested in 27 oncology treatment center projects, including Shanghai Hongfei, Nanjing Ruike and Shanghai Huajian; and set up 7 doctor groups, including Guizhou Cancer Doctor Group and Anhui Cancer Doctor Group. The company has accumulated in the field of anti-tumor for many years, taking the hospital as the platform to actively introduce management team and doctor resources to improve the level of diagnosis and treatment, profitability and supply chain management. Relying on the doctor group, hospital platform and radiotherapy and chemotherapy center to create a tumor ecosystem, Chaoyang Hospital achieved a net profit of 38.3752 million yuan in the first half of the year. We believe that with the continuous promotion of hospital mergers and acquisitions and cooperation projects. The company is expected to replicate the model of Chaoyang Hospital with high probability and achieve the rapid growth of overall medical service business income.
3. A number of varieties have entered the health insurance, and the growth of the pharmaceutical sector is stable.
The company's core varieties, Aidi and Xingning injection, adopt the strategy of protecting the market, actively participate in local bidding, open up a blank market, and exchange quantity with price; at the same time, increase the marketing efforts of second-line varieties such as Lobatin for injection, Baogong hemostatic capsule and Jingulian capsule to reduce dependence on a single variety. The company's four exclusive dosage forms, such as Ai Yu capsule, Dan Deng Tongnao dropping Pill, Liqi Huoxue dropping Pill and Gynecological Tiaojing dropping Pill, have newly entered the health insurance catalogue. In addition, the use restrictions of compound Mylabris capsule and Lobatin for injection have been cancelled, and the growth of second-tier products can be accelerated. The product income structure is expected to be improved, and the whole drug plate is expected to maintain stable growth.
Investment suggestion
The company actively opens up the blank market and strengthens the marketing of second-tier varieties, and the pharmaceutical sector is expected to maintain steady growth. Relying on doctors Group, hospital platform and radiotherapy and chemotherapy center to create a tumor ecosystem, vigorously expand the medical services sector, and promote rapid revenue growth, the company is expected to return to its mother in 2017-2019 net profit of 503 million yuan, 591 million yuan and 645 million yuan, EPS 0.63,0.75 and 0.81 yuan, corresponding to PE of 22x, 18x and 17x, maintaining a "highly recommended" rating.
Risk tips: drug prices are reduced; the layout of medical services is not up to expectations.
