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Depth-Company-Tonghua Dongbao (600867): Adjustment of business strategy affects current performance Three generations of products advance as scheduled to accumulate long-term growth

28/03/2020 0 Comment

Depth * Company * Tonghua Dongbao (600867): Adjustment of business strategy affects current performance Three generations of products advance as scheduled to accumulate long-term growth

The company released its 2018 annual report: Reporting consolidated revenue26.

9.3 billion (+5.

80%), net profit attributable to mother 8.

3.9 billion (+0.

25%), deducting non-attributed net profit8.

1.4 billion (-2.

46%), EPS 0.

41 yuan (-16.

33%).

Among them, Q4 achieved operating income in a single quarter6.

8.4 billion (-1.

23%), net profit attributable to mother 1.

5.1 billion (-19.

67%), deducting non-attributed net profit1.

4.9 billion (-22.

83%).

We are optimistic about the company’s long-term development and maintain an overweight rating.

The main points of the support level 18Q4 are still affected by destocking, and it is expected to return to normal and rapid growth in 19 years: the growth rate of revenue and net profit attributable to mothers in 2018 were 5 respectively.

80% and 0.

25%, of which in the fourth quarter achieved a single quarter operating income6.

8.4 billion, net profit attributable to mothers1.

51 ppm, a ten-year growth rate of -1.

23% and -19.

Although 67% is still showing a downward trend, it is significantly narrower than Q3, and the chain growth rates are 25.

43% and 0.

A significant improvement of 06% (Q4 quarter-on-quarter growth rates were 3 respectively.

22% and -21.

09%).

Reconstruction of human insulin destocking fell from the original level of more than two months to one month, and the stock fell by 64%.

At the same time, the development of the grassroots market gives the company a channel advantage, with a market share of more than 25%, second only to Novo Nordisk.

The adjustment of marketing strategy in 18 years has led to a decline in performance growth, and high growth is expected to resume in 19 years.

Higher amortization costs and higher sales expense ratios have lowered profit margins: In terms of sectors, the gross profit margins of insulin and proprietary Chinese medicines have decreased.

89pp and 4.

73pp, income remained stable; blood glucose test strips, blood collection needles, injection pens and other equipment revenue increased by 20.

04%, gross margin increased by 5.

29pp; the real estate revenue increased by 47% due to settlement; it is expected that the plastic steel doors and windows and real estate business will gradually shrink in the future.

In terms of expense ratio, the sales expense ratio is 26.

03% up 1.56pp, mainly due to the company’s increase in the construction of the primary market channels and expansion of the team, sales staff salary expenses increased by 56.

34%; the amount of management expenses remained the same as the previous year, and the expense ratio decreased by 0.

55pp; financial expense ratio is 0.

38% decreased slightly by 0.

17pp.

The overall period expense 西湖阁体验网 ratio is 36.

11% increased slightly.

The new product is about to be approved. It is worth looking forward to: Ganjing has completed all the clinical data verification and is waiting for the final on-site inspection.

Insulin aspart has been reported.

In addition, the drug registration application for Sitagliptin dimethylbisbutyl tablets has also been approved. The company cooperated with Adocia Company on the fourth generation of insulin, and the product line is increasingly perfect. It is expected to rely on the advantages of existing channels to form rapid volume of products in the future.

It is estimated that the company is a leading company in the field of diabetes drugs, and has channel advantages. The next three generations of insulin products will be promoted smoothly. After listing, it will form a product line combination advantage to promote rapid volume.

Affected by the inventory affected by the channel in 2018, sales revenues in Q3 and Q4 decreased, which dragged down performance and gradually exceeded expectations. Due to the lower base, the 19-20 profit forecast was lowered, and the net profit for 2019-2021 is expected to be 9 respectively.

84/11.

69/14.

50,000 yuan, corresponding to EPS 0.

48/0.

58/0.

69 yuan, the current expected corresponding price-earnings ratio is 35.

0/29.

5/24.

5 times.

We are optimistic about the company’s long-term development and maintain an overweight rating.
The main risks faced by the rating are the risks that the progress of new products is not up to expectations; the risk of intensified competition for second-generation insulin products; and the risks brought by risk transfer.