Renfu Pharmaceutical (600079) Annual Report Comment: Steady Growth of Main Business, Goodwill Risk Decreased Significantly

Renfu Pharmaceutical (600079) Annual Report Comment: Steady Growth of Main Business, Goodwill Risk Decreased Significantly

Event: The company released its 2018 annual report: 186 in revenue.

3.4 billion, an annual increase of 20.

64%; net profit attributable to mother is -23.

5.8 billion, an annual decline of 213.

97%; EPSEPS is -1.

81 yuan.

  At the same time, the first quarter report of 2019 was released: 52 realized income.

6.3 billion, an annual increase of 18.

59%, net profit attributable to mother is 1.

7.3 billion, a decline of 2 every year.

65%; EPSEPS is 0.

11 yuan.

  Investment points: The company’s main business has grown steadily, and sales of core products have continued to expand.

  In terms of categories, the pharmaceutical industry achieved revenues of 81 in 2018.

3.0 billion, an annual increase of 19.

19%, of which 35 income from medications for the nervous system.

7.8 billion, an annual increase of 27.

94%; developing countries achieve revenue from regulatory medicines5.

08 million yuan, an annual increase of 20.

90%; Uygur medicine achieves income4.

3 billion, an annual increase of 15.

86%; condom income 18.

2.4 billion, an annual increase of 177.

71%, mainly due to the consolidation factor of Lofos Group.

In terms of sales of core products, sufentanil citrate injection (converted by 1ml: 50ug) sold 3898 in 2018.

350,000 sticks, an annual increase of 11.

24%; remifentanil hydrochloride for injection (converted to 1mg) is sold in 1692.

09 million sticks, an annual increase of 27.

28%; morphinone hydrochloride and nalbuphine chloride sales were 178 respectively.

940 thousand and 307.

260,000 sticks, an annual increase of 72.

77% and 125.

51%; sales of ursodeoxycholic acid capsules23.

830,000 bottles, sales fell 6 year-on-year.

33%; Zukamu pellets sold 918.

850,000 boxes, an increase of 10 in ten years.

84%; sales of progesterone APIs were 86,768.

74 pounds, an increase of 98 in ten years.76%.

In 2018, the pharmaceutical wholesale and related businesses realized revenue 103.

3.7 billion, an annual increase of 22.

73%, of which Renfu Hubei realized sales income of 55.

5.6 billion, an annual increase of 18.

69%. In addition, the company optimized the organizational structure of the two pharmaceutical business platforms in Hubei and Sichuan to enhance regional competition in the commercial sector.

  Outstanding provision for impairment of goodwill affects performance in the short term and improves performance stability in the medium and long term.

  The consolidated gross profit margin for 2018 was 39.

93%, an increase of 1 per year.

85, of which the gross profit margin of the pharmaceutical manufacturing industry was 65.

70%, increase by 0 every year.

The scale of 67 is related to the company’s strict control of quality costs and the rapid expansion of marketing and upgrading. The gross profit margin of the pharmaceutical wholesale industry is 19.

77%, an increase of 3 per year.

06 Excellence, reflecting the achievements of optimizing resources and customer structure.

In terms of expenses, the increase was mainly due to the increase in sales expense ratio2.

62 Total, mainly due to the significant increase in marketing and advertising expenses; other additional expense rates were basically stable.

The company’s 2018 performance exceeded 23.

USD 5.8 billion, mainly related to the provision for impairment losses on goodwill and impairment losses on intangible assets totaling 31.

03 billion related.

At the end of 2018, the ratio of goodwill to total assets was 10.

73%, and in the first quarter of 2019, the increase in accounts receivable was also factored in, and the Lofos Group is operating steadily, and the impairment loss of goodwill may not be large. Therefore, we believe that the industrial performance has fallen sharply in the short term,Eliminating the volatility of performance caused by this factor, medium and long-term performance is expected to grow steadily.

  Q1 2019 revenue continued to grow steadily.

  Q1 2019 revenue increased by 18.

59%, anesthesia business is expected to grow by about 20%, nalbuphine and hydromorphone continue to grow rapidly; condom business grows 20%; wholesale business in Q1 2019 continued to grow steadily.

  In terms of performance, the year-on-year decline in Q1 in 2019 was mainly 上海夜网论坛 related to the improvement in gross profit margin and the increase in selling expenses. In addition, the increase in minority shareholders’ equity was also part of the reason.

  Maintain the “Recommended” level.

  We expect the company’s EPS to be zero in 2019-2021.

60 yuan, 0.

74 yuan and 0.

93 yuan, PE is 19 times, 15 times and 12 times, the current forecast level, taking into account the company’s low performance has passed, focusing on superior resources, optimistic about the company’s long-term development, maintaining the “recommended” rating.

  Risk warning: product price reduction is greater than expected; sales promotion fails to meet expectations; product certification fails to meet expectations.

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