Main points:
I. steady progress of traditional Chinese medicine business
During the reporting period, the company's business income from prepared pieces of traditional Chinese medicine was 1.4852792 billion yuan, an increase of 15.44% over the same period last year, and the business income from trade in traditional Chinese medicine was 3.7602115 billion yuan, an increase of 2.77% over the same period last year. In terms of prepared slices of traditional Chinese medicine, the company continues to expand business channels such as hospital operation, pharmacy trusteeship and pharmaceutical terminal market, and promotes the sustained growth of the business of prepared slices of traditional Chinese medicine through the synergy of all links of the industrial chain.
In the aspect of traditional Chinese medicine trade, it takes the professional market of traditional Chinese medicine and the trading platform of bulk medicine as the platform, combines the physical market and virtual market, and forms a strategic cooperative relationship with medicine growers, traders and manufacturers. The main sales model is own-brand distribution and sales. Due to the large base of the company's traditional Chinese medicine trade business, the slow growth rate has a certain drag on the company's overall growth rate, but as the company changes from a traditional Chinese medicine trader to a traditional Chinese medicine supply service provider, the growth rate is expected to pick up.
II. The period of rapid growth of western medicine business
During the reporting period, the company's revenue from self-produced drugs was 118.6387 million yuan, down 2.55% from the same period last year; during the reporting period, the company's operating income from drug trade was 2.449366 billion yuan, an increase of 31.77% over the same period last year. At present, Kangmei has established deep cooperation with more than 2000 medical institutions and 150000 chain drugstores across the country, and is deeply involved in the field of hospital drug circulation through hospital "pharmacy trusteeship" and other modes. There is no doubt that this is a channel advantage for the company. As a result, the company's drug circulation revenue grew by 70% in 2014, much higher than the industry average growth rate of about 15%. It is expected that the next 2-3 years will still be in a period of rapid growth. The company reported a growth rate of 31.77%, mainly because the market is becoming saturated, and if it cannot continue to expand new pharmacy resources, then the growth rate may gradually slow down to the industry average growth rate, but in spite of this, the future growth rate may still be higher than the industry average, and is expected to maintain 2-3 years.
III. Rapid Breakthrough in Health Food Business
At present, the company is promoting the sales of health food and food series on e-commerce platform. During the reporting period, the company's health food and food business income was 613.955 million yuan, an increase of 70.70% over the same period last year. The company's health food business is in a rapid breakthrough phase, with a growth rate of 120.16% last year and 70.70% in the middle of this year, continuing to maintain rapid growth. With the scale of health food, the gross profit margin of the business has also increased, from 20% reported in the middle of last year to 27% in the middle of this year, and the business is expected to enter the harvest period from the sowing time. There is more room for imagination in the health food market, so the business deserves long-term attention.
IV. Investment strategy
As a leading enterprise in the industry, on the basis of doing a good job in the main business of traditional Chinese medicine circulation, the company continues to expand, drug circulation and health food business is growing at a high speed. As the company continues to accumulate channel advantages, it is optimistic about the company's epitaxial growth. It is estimated that the company's EPS from 2015 to 2017 will be 0.69,0.83,1.00 yuan respectively, and the corresponding PE will be 20.9,17.4,14.6 times respectively. At present, the company's valuation is low in the industry, maintaining the company's "buy" rating.