Summary:
The company is a leading pharmaceutical enterprise in Shaoxing, and the largest shareholder is Shaoxing Zhenyuan Health Industry Group Co., Ltd., with a shareholding ratio of 19.94%. The actual controller is the State-owned assets Supervision and Administration Commission of Shaoxing Municipal people's Government. The business is mainly divided into pharmaceutical commerce, pharmaceutical industry, pharmaceutical logistics, health services and other parts.
The company experienced a low ebb from 2013 to 2015. However, with the completion of relocation and GMP certification, actively responding to the two-vote system, roxithromycin and other prices rebounding, the layout of the whole industry chain of traditional Chinese medicine to create a new performance growth point, the company has gradually come out of the trough, performance returned to the normal trend track. Future highlights: 1. On the industrial side, roxithromycin prices bottomed out in March 2014 and began to pick up rapidly, leading to the growth of the company's API business. Sisomicin is the raw material of Achaogen's Plazomicin, and the company is its main supplier. Only Abbott Laboratories and Haizheng have approval documents in China, and the company's market share is about 2%. This year, it is expected to double its revenue of about 20 million yuan last year. 2. On the commercial side, the company's original transfer business is also transforming to pure sales business. With the active layout of DTC pharmacies, retail clinical variety sales doubled in 2016, and the company's chain drugstores are expected to enjoy the growth of the entire retail drugstore industry. In terms of prepared slices of traditional Chinese medicine, the company promotes the layout of the whole industry chain, improves production efficiency and drives the company's performance growth. 3. In terms of health services, the company holds a 68% stake in Tongyuan Health Management Co., Ltd. with the liberalization of China's two-child policy and the upgrading of consumption, Yuezi Center will usher in a period of rapid development. The company has a good relationship with Shaoxing Maternal and Child Health Hospital, and the two are expected to replicate quickly in the future.
Profit forecast: we expect the company's EPS from 2017 to 2019 to be 0.20, 0.24 and 0.28 yuan respectively, covering it for the first time and giving it an "overweight" rating.
Risk tips: 1) changes in the price of APIs; 2) the progress of research and development is not as expected.
