2017H1 performance meets expectations
Shanghai Kaibao announced its results for the first half of 2017: operating income was 933 million yuan, up 5.49% from the same period last year; net profit attributed to the parent company was 195 million yuan, up 1.59% from the same period last year, corresponding to 0.18 yuan per share. The performance is in line with our expectations. It is proposed to distribute 1 yuan (including tax) for every 10 shares.
Trend of development
2Q growth rate has slowed down. 2Q2017's revenue grew by 4.82% (1QQ 6.19%), net profit fell by 4.18% (1QQ 9.12%), and both revenue and net profit growth slowed. We believe that the main reason is that Tanreqing injection is under great pressure from medical insurance control fees, and the scope of use is clearly restricted under the new version of the medical insurance catalogue, which is limited to critically ill patients in secondary and above medical institutions. In the long run, the growth space of Tanreqing injection is limited and diversified income structure is needed.
Good operating ability. 1H2017's gross profit margin is 81.47%, slightly lower than the same period, and is expected to be affected by the pressure of price reduction. The turnover days of accounts receivable are 95 days, 5 days less than that of the same period; the days of inventory turnover are 155 days, 17 days less than that of the same period; and the operating capacity is good.
It will take time to actively open up new markets and contribute to performance. The company actively opens up new markets, but it is still dominated by a single income structure in the short and medium term, and it is difficult for the product echelon to contribute to its performance in time. Among them, Dinggui Oil soft capsule (treating irritable bowel syndrome), Shufeng Zhitong capsule (treating migraine), Huadan Anshen mixture (anti-insomnia), Tanreqing oral liquid (new dosage form), Duranamine for injection (anti-tumor, national class 1.1 new anti-tumor biological drug), paclitaxel micelle for injection (new broad-spectrum anticancer drug, national class 2.2 new drug) is in phase Ⅲ clinical study. Youxinding capsule (antidepressant, 1.1 kinds of new traditional Chinese medicine) is in phase Ⅱ clinical study.
Profit forecast
Maintain a "neutral" rating. Taking into account the changes in the company's equity, we keep our net profit forecast for 2017 and 2018 unchanged, but the earnings per share forecast is reduced by 23% to 0.26exp 0.27 respectively.
Valuation and suggestion
At present, the company's stock price corresponds to the company's 2017 / 2018 P / A / E / 29X/29X. Taking into account the overall downward movement of the valuation center of the gem and the slowdown in the company's growth, we reduce the target price by 39.13% to RMB7.0. the target price is 27X/26X corresponding to the 2017 Pamp E in 2018.
Risk.
Product price reduction risk, new product launch is lower than expected, extension progress is lower than expected.