Sinopharm Consistency (000028): Performance in line with expectations

2019H1 results are in line with our expectations of Sinopharm’s unanimously announced 2019H1 results: operating income of 252.

3 ppm, an increase of 21 per year.

4%; net profit attributable to parent company 6.

51 ppm, an increase of ten years.

4% (mainly because in the second half of 2018, after the National University 青岛夜网 Pharmacy dating strategic investor Warbo United, Sinopharm unanimously replaced the National University Pharmacy from 100% to 60%), corresponding to a profit of 1.

52 yuan.

Trends The net profit of the distribution segment is increasing by 14 per year.

7%, slightly more than we expected.

In the first half of 2019, the distribution business achieved operating income of 194.

8% 10%, an annual growth of 23%, mainly due to the reduction of the pressure of the two-vote system and the strong development of new business.

Among them, retail direct sales increased by 30% per year, device consumables increased by 52% per year, retail diagnosis and treatment increased by 80% per year, and primary care increased by 34% per year.

In the first half of the year, the distribution started the overall logistics plan for wholesale and retail sales. The retail sales of wholesale and retail sales increased by 54% each year, and those outside Guangdong and Guangdong increased by 64% each year.

In the implementation of “4 + 7” volume procurement, Shenzhen company obtained 22 varieties of distribution rights, 84% of varieties; Guangzhou company obtained 24 varieties of distribution rights, 96% of varieties.

Revenue growth in the retail sector accelerated.

In the first half of 2019, NUS Pharmacy achieved operating income of 61.

10,000 yuan, an increase of 18 in ten years.

8% (vs. 8% in 2018), net profit1.

50,000 yuan, an increase of 7 in ten years.

8%, mainly due to the high base in the first half of 2018.

NUS Pharmacy directly operated 3,470 stores (a net increase of 228) and 1,123 franchised stores (a net increase of 50).
.

The “new concept” pilot pharmacy jointly launched by NUS Pharmacy and Wobolian opened in Shanghai on January 20, and sales growth increased by 34 in the first half of 2019.

8%, the number of transactions increased by 31 in decades.

5%.

Industrial investment returns are solid.

Hyundai Pharmaceutical contributed investment income of 65 million yuan (ten years-0.

6%), Shenzhen Zhijun Pharmaceutical contributed an investment income of 65 million yuan (at least -0.

6%), Pingshan Pharmaceutical contributed investment income of 22 million yuan (+45 for ten years.

1%), Wanle Pharmaceutical contributed investment income of 34 million yuan (ten years + 12%).

Earnings forecasts and estimates We maintain our 2019/2020 earnings forecasts3.

10/3.

54 yuan unchanged, previously corresponding to 9.

6% and 14.

4% growth.

The company currently expects to correspond to 15/13 times P / E in 2019/2020.

We maintain our Outperform rating and target price of 56.

6 yuan, corresponding to 18/16 times P / E in 2019/2020, which is expected to be 23 compared with the current one.

3% space.
Risk-bearing volume purchase price reduction pressure, new business expansion is less than expected