Events:
Qizheng Tibetan Medicine released semi-annual report for 2020: 2020H1 achieved operating income of 612 million yuan, an increase of 0.37% over the same period last year; net profit of 221 million yuan, up 9.48% over the same period last year; net profit of 169 million yuan, down 9.61% over the same period last year; and net cash flow from operating activities was 397 million yuan, an increase of 100.67% over the same period last year.
Comments:
Q2 performance growth has recovered significantly, and the strategy of "one axis, two wings and three supports" continues to advance. In the single quarter of 2020Q1/Q2, the company achieved revenue of 1.52 million yuan, 29.21% compared with the same period last year, and net profit of 0.49 million yuan, 47.01%, respectively, deducting the non-net profit of 0.50 trillion yuan, 11.21%, respectively, compared with the same period last year. In the first half of 2020, the company continued to promote the strategic layout of "one axis, two wings and three supports". Under the influence of COVID-19 's epidemic situation, the company flexibly adjusted its marketing strategy and promotion methods, accelerated the Internet transformation of academic marketing and brand marketing, and made use of brand advantages to accelerate the layout of new products.
Clinical research and development continues to advance, category reserves continue to be enriched. The company continues to promote product development and resource sustainability research around the pain integration strategy. 2020H1 invested 23 million yuan in R & D, an increase of 18.68% over the same period last year. During the reporting period, the company's core varieties Bai Mai Ointment and Ruyi Zhenbao tablets were included in the key research topics of the "Modernization Research of traditional Chinese Medicine" of the Ministry of Science and Technology of the people's Republic of China during the 13th five-year Plan; during the epidemic, the company actively participated in the clinical research of Tibetan medicine for the prevention and treatment of novel coronavirus infection, and a number of products were included in the list of anti-epidemic drugs in Tibet, Qinghai and Gansu.
Profit forecast: the impact of the epidemic on the company is limited, and the performance growth rate in the second quarter has recovered obviously. from 2020 to 2022, the EPS was 0.78,0.91 and 1.05 yuan respectively, and the corresponding PE was 40X, 34X and 30X respectively. Taking into account the steady growth of the company's core plaster products, the ointment is in the rising period with large growth flexibility, sufficient equity incentives and strong certainty for future growth, and the target price for six months will be raised to 35.00 yuan according to the 45X price-to-earnings ratio in 2021. Maintain the "overweight" rating.
Risk tips: terminal promotion is not up to expectations, research and development progress is not up to expectations, bidding price reduction risk.
