Main points of investment:
China reported high growth in performance, and is expected to maintain high growth throughout the year.
In the first half of the year, the company's revenue, net profit and net profit after deduction were 4.28,0.81 and 79 million respectively, an increase of 46.12%, 157.57% and 156% respectively over the same period last year, which is in line with the growth range of 150% of the company's semi-annual performance forecast. At the same time, the company expects the net profit from January to September to range from 9702 to 116.43 million yuan, an increase of 100% over the same period last year. We expect the company to maintain a high growth trend throughout the year.
The performance of traditional Chinese medicine preparation is steady, and the second take-off appears initially.
The performance of the company's traditional Chinese medicine preparation is sound, and its revenue has increased by 14.38%. According to the report of the parent company, we estimate that the net profit growth rate is more than 50% (there is also a base reason). The second take-off has begun to show a trend. The company has a good competition pattern for the variety of traditional Chinese medicine preparations, and it can often maintain an ideal price system in the bidding. The main varieties Wangshi Baochi pills (low-cost drugs, independent pricing) and Ji Desheng Snake tablets have made considerable price increases in a number of provinces and cities that have promoted the bidding. At the same time, the company has implemented marketing reform and built a national sales network to preserve quantity and increase increments. It is expected to promote the preparation of traditional Chinese medicine to enter the rising channel again.
Business growth of API and intermediates is outstanding
As a stable source of profit for the company, API and intermediates business performed well, with revenue growth of 35.56% and expected contribution profit of more than 20 million yuan. Chemical and pharmaceutical intermediates increased revenue by 154.30% due to the merger of Dongli enterprise management revenue. At the same time, due to the high gross profit margin of Dongli enterprise management, the gross profit margin of the whole business increased by 19.17% to 54.62%. Dongli managed a net profit of 30.75 million in the first half and is expected to achieve a combined profit of 6500-70 million for the whole year, continuing to fulfill its performance commitments.
Sulfur-free pieces of traditional Chinese medicine are ready to go.
The company invests in Longxi Baohetang and Baohetang (Bozhou) Company to enter the large-scale sulfur-free production project and carry out related authentic traditional Chinese medicine business. At present, Bozhou Baohe Hall has begun to process traditional Chinese medicine and slices on the basis of the original Kangpu; Longxi Baohe Hall has been fully prepared, only to be certified, and is expected to achieve revenue by the end of the year. In the future, traditional Chinese medicine and prepared slices are expected to become an important profit growth point for the company.
Continue to extend expectations and maintain a "buy" rating
Breakthrough in the reform of the company's state-owned enterprises, achieve the optimization of equity and the consistency of the interests of senior executives, and promote "one main body and two wings"
Strategy, the future of the company in the new chemical agents, bio-pharmaceuticals, traditional Chinese medicine and even in the field of health extension mergers and acquisitions, there will be continuous extension expectations. It is estimated that the EPS from 2016 to 2018 is 0.41,0.56,0.70 yuan respectively, and the corresponding PE is 61,44,35 times respectively. Maintain the buy rating.
Risk hint
The progress of marketing reform is lower than expected, and the progress of M & An is lower than expected.