East China Medicine (000963): High-quality white horse surpasses expectations

East China Medicine (000963): High-quality white horse surpasses expectations

Performance exceeded expectations The company released its 2018 annual report on April 18, achieving a total operating income of 306.

6.3 billion (+10.

2% YoY), net profit attributable to mother 22.

6.7 billion (+27.

4% yoy), the strong growth of the industrial sector combined with the recovery of business, performance was much higher than expected.

The company has built a new industrial sector focusing on the four major areas of diabetes, super-anti-tumor, anti-tumor and immunosuppressive agents, actively deployed the field of medical beauty, and is optimistic about the company’s subsequent estimates for further repair.

We raise the company’s EPS forecast for 19-21 to 1.



14 yuan (VS before the value of 1.


37 /-), 19 years of PE25-27x (compared company’s 19 years of PE under the segment assessment method is 26x), and a target price of 49.


19 yuan, maintain BUY rating.

The research and development increased the pound, and the sales team grew further. 1) Benefiting from the increase in the proportion of industrial revenue, the company’s internal gross profit margin continued to rise.

9pp; 2) The company’s 18 years of research and development reached 7.

0.6 billion (+52.

9%), accounting for 8% of industrial income.

6%, the company currently has nearly 40 clinical projects, the company expects 19 years of research and development costs will exceed 900 million (+ 30%); 3) the company’s 18-year sales team expanded to 5,463 people (VS 2017 4589 people), of which grass-roots salesMore than 2,800 employees (800+ net increase in VS 2017), which is conducive to continued grassroots penetration of future products.

The industrial sector, which saw strong growth, achieved revenue 82.

400 million (+ 24% year-on-year), strong growth in China, the United States and East China (profit + 39% year-on-year): 1) Bailing Capsules + 11% (medical insurance control fee), after the addition of the new base drug catalog in 18 years, the grassroots will promote accelerated volume; 2) Acarbose + yoyo 30%; 武汉夜生活网 3) Immune product line + yoyo 30% (indication expansion + import substitution + grassroots promotion), of which cyclosporine + 14-15% yoyo, morpho + 30% yoyo,Tacrolimus + yoyo + 40%; 4) pantoprazole as a whole + yoyo + 20%; capsules + yoyo + 30%; 5) the number of new medical insurance products gradually increased, so that indobufen reached 50 million+ Revenue (19E exceeds US $ 100 million), daptomycin achieves 50 million revenue in advance (19E 80 million to 100 million US dollars), and we expect the industrial sector’s 19-year profit is expected to maintain a 30% growth.

The rebound in business performance benefited from the low base of pure sales development and the same period last year.

500 million (+5.

5% (yoy), profit growth of 5-6%, gross margin increased slightly.

Considering: 1) the comparison of pure sales 重庆耍耍网 caliber in 19 years after the two-vote system, the business growth path is clear; 2) the company is a commercial leader in Zhejiang Province, ranking first in market share (?
22%), we expect the revenue growth of the commercial sector in 19 years to further recover to levels above 10%.

Exploiting new medical beauty sector, listed companies have established R & D channels through independent research and development + commissioned research and development + external mergers and acquisitions: 1) The company actively explores new medical beauty sector. Sinclair contributed 76 million yuan in revenue in 18 years.The U.S. plate is expected to officially kick off in 19 (microspheres are already in the declaration); 2) liraglutide is expected to report production at the end of the year; 3) TTP273 has been clinically declared and is expected to report production at the end of 2020;The phase 2 clinical trial of tinib is expected to end in 3Q19; 4) The company is actively conducting overseas ANDA reports. Pantoprazole injection has been temporarily approved by the FDA, and tacrolimus has been promoted to be approved in 1H19.

Risk Warning: Risk of core product price reduction; product development progress is not up to expectations