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Shijiazhuang Yiling Pharmaceutical:Gross margin up sharply,earnings growth fast

发布时间:2016-08-23    研究机构:瑞银证券

H1 net profit attributable to the parent +39.6% YoY, slightly above consensus

In H116, revenue/net profit attributable to the parent company wasRmb2.031bn/311m, up 19%/39.6% YoY; net profit excluding one-offs came in atRmb314m, up 38.3% YoY. Q216 revenue/net profit attributable to the parentcompany rose 9.8%/28.3% YoY, slightly better than expectations. In H116, netoperating cash flow was Rmb310m, up 18x YoY and equivalent to net profit. Thecompany guided for 20%-40% YoY growth in Q1-Q316 net profit attributable to theparent company.

Gross margin up sharply, expense ratios higher

Gross margin reached 68.19% in H116, up 4.7ppt from H115 and a relatively highlevel in the company’s history. We believe this was the main reason for faster net profitgrowth than revenue growth. We attribute the high gross margin to falling TCM rawmaterial prices. Expense ratios increased 3.2ppt from H115 and net margin expandedto a historical high of 15.19%. We expect net margin to steadily rise with a higherproduction scale and stabilization of the sales force.

Lianhua Qingwen revenue up fast

In H116, anti-cold drug (the Lianhua Qingwen series) revenue rose 44% YoY toRmb388m, higher than market expectations. We estimate full-year anti-cold drugrevenue at Rmb800m+. Cardiovascular and cerebrovascular drug revenue increased12.6% YoY to Rmb1.38bn in H116. IMS data on sample hospitals shows that thecompany’s Stilbene Li strong heart capsules/Shensong Yangxin capsules/Tongxinluocapsules posted revenue growth of 24%/11.7%/6% YoY in H116, faster than in 2015.Food and beverage revenue was Rmb8.13m in H116.

Valuation: Maintain price target of Rmb23.32 and Buy rating

We maintain our 2016-18E EPS at Rmb0.48/0.56/0.63. Our DCF-based price target ofRmb23.32 (8.1% WACC) implies 42x 2017E PE. We maintain our Buy rating.

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