Main points of investment
Event: on October 29, 2018, the company released its three-quarter report of 2018. In the first three quarters of 2018, the company achieved operating income of 1.551 billion yuan, an increase of 100.47% over the same period last year, a net profit of 532 million yuan, an increase of 36.18%, and a non-return net profit of 521 million yuan, an increase of 66.05% over the same period last year. At the same time, it is expected to achieve a net profit of 6.94-800 million yuan in 2018, an increase of 30% and 50% over the same period last year.
Comments: deduction non-performance continues to maintain rapid growth, bright performance, the whole year is expected to exceed expectations. In the first half of 2018, the company achieved a gross profit margin of 84.08%, which was basically the same as that of 84.27% in the second quarter, and the increase in the proportion of income from two-vote system and high-margin products tended to be stable. The growth of non-net profit deducted is significantly higher than that of homed net profit, mainly due to the non-recurrent profit and loss of 2017Q3 of 77.1 million (of which 54.75 million of the profit and loss of trading financial assets) and only 11.33 million of 2018Q3 (of which the profit and loss of trading financial assets is-16.27 million). Quarter by quarter, the third quarter of 2018 continued the high growth trend of the first half of the year, with operating income of 570 million yuan in the third quarter, an increase of 85.42% and 5.49% compared with the same period last year, and net profit of 182 million yuan, up 15.14% over the same period last year. Deducting 185 million yuan of non-return net profit, an increase of 53.09% over the same period last year. We expect that the company's genetic engineering products (interleukin-11, recombinant human basic fibroblast growth factor, etc.), temozolomide, arsenic trioxide, enoxaparin sodium, etc., will continue to maintain rapid sales growth; the influence of compound coenzyme and thymopentin on the company gradually decreased. Lenalidomide in the second and third quarters mainly carried out health insurance negotiations and networking in various provinces of the country, and hospital development was gradually promoted, looking forward to the follow-up gradually.
The net operating cash flow was 378 million yuan, an increase of 4.44% over the same period last year.
In the first three quarters of 2018, the sales expense rate was 38.18%, the management expense rate was 3.60%, the R & D expense rate was 3.35%, and the financial expense rate was-1.03%. The sales cost was 592 million yuan, an increase of 248.11% over the same period last year, mainly due to the change of sales model and the adjustment of sales strategy, as well as the expansion of sales hospitals with Lenadomide, and the related expenses increased greatly.
The rate of management expenses was 55.82 million yuan, an increase of 50.39% over the same period last year, and R & D expenses were 51.99 million.
Profit forecast and investment advice: considering that the company continued to maintain rapid growth in the second and third quarters, we raised the company's operating income from 2018 to 2020 to 19.91,24.14 and 3.01 billion yuan, up 60.26%, 21.29% and 24.65% over the same period last year. The net profit of the parent company was 7.17,9.47 and 1.243 billion yuan, up 34.44%, 32.06% and 31.17% over the same period last year. The corresponding EPS is 1.05,1.38,1.81 yuan.
With the rapid growth of the company's genetic engineering products, Lenalidomide has gradually promoted the bidding of various provinces and cities, and a breakthrough is about to be made in the research and development of products to maintain the "buy" rating.
Risk hint: the risk that the sales of lenalidomide on the market is not as expected, the risk that drug bidding is not as expected, and the risk that marketing reform is not as expected.
