China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) (000999)
Main points:
China Resources Group is an important part of great health, and its stable performance is concerned by northbound capital
With a wide range of products and rich product lines, the company is an important link in the big health sector of China Resources Group. China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) the main core business is located in the field of CHC health consumer goods and Rx prescription drugs. In 2020, the company has 21 varieties with annual sales of more than 100 million yuan. The “999” brand can be said to be a household name. The company’s own performance has increased steadily and its cash flow is excellent, which is deeply favored by northbound funds.
The incentive scheme is set with multi-dimensional assessment to highlight the company’s development confidence
On December 2, 2021, the company issued the 2021 restricted stock incentive plan (Draft), which plans to grant 284 incentive objects 9.789 million restricted shares at a grant price of 14.84 yuan / share. The incentive scheme is quite bright. On the one hand, the equity incentive of central enterprises will consider all aspects. The implementation of the scheme itself shows the excellent ability of the company. On the other hand, the scheme unlocking conditions set multi-dimensional objectives, in which the conditions for deducting the non parent net profit growth rate are not as simple as the basic growth rate of 10%. Therefore, it is reasonable to judge that this multidimensional scheme will better stimulate the potential of the company.
Continue to tap the brand value of “three nine” and bring new development with new changes
In the two business lines of the company, although prescription drugs are greatly affected by policies, CHC business has become the main source of revenue of the company with the strong brand effect of “39”. Moreover, the company has been exploring changes on this basis, expanding the market boundary through new products, new marketing means and new e-commerce channels, and is optimistic about the expansion of new fields under the company’s brand extension in the future.
Investment suggestion: for the first time, give “buy” investment rating
We expect that the company’s revenue from 2021 to 2023 will be RMB 16.05/18.27/20.36 billion respectively, with a year-on-year increase of 17.7% / 13.8% / 11.4% respectively, and the net profit attributable to the parent company will be RMB 2.02/23.4/2.56 billion respectively, with a year-on-year increase of 26.2% / 16.1% / 9.6% respectively, corresponding to EPS of RMB 2.06/2.39/2.62 from 2021 to 2023, with a corresponding valuation of 16x / 14x / 12x. For the first time, the “buy” investment rating is given.
Risk statement
Industry policy risk is lower than expected; The promotion of new varieties was not as expected; The promotion of equity incentive scheme was less than expected.
