\u3000\u30 Shenzhen Fountain Corporation(000005) 38 Yunnan Baiyao Group Co.Ltd(000538) )
Event: the company released the first quarterly report of 2022. In the first quarter of 2022, the company’s revenue was 9.43 billion yuan, a year-on-year increase of – 8.70%, and the net profit attributable to the parent was 914 million yuan, a year-on-year increase of + 19.81%, deducting 1.320 billion yuan of non attributable net profit, a year-on-year increase of – 3.34%.
The performance is basically in line with expectations, and the investment income affects the apparent profit. In 2022q1, the growth of net profit attributable to the parent company is inconsistent with the growth trend of income side, which is mainly due to the disturbance of profit and loss caused by investment.
In 2022q1, the net income from changes in fair value of the company was – 525 million yuan, compared with – 789 million yuan in the same period of last year. The disturbance of investment to the company’s apparent profit still exists.
Securities investment has contracted significantly, and the subsequent disturbance will be reduced. According to the company’s announcement, the book balance of the company’s securities investment at the end of 2021 was 4.18 billion yuan; Compared with the book balance of 10.87 billion at the end of 2020, the company’s securities investment scale has shrunk significantly. In 2022q1, the subject of trading financial assets was 4.025 billion yuan, a decrease of 4.72 billion yuan compared with the end of 2021, and the scale continued to shrink. We expect that with the recovery of the follow-up market, the company is expected to continue to control securities investment at a healthy level, and the disturbance to the overall performance will be smaller and smaller. It is expected that the main business is relatively stable, the epidemic disturbance factors are large, and the high base number causes pressure. In 2022q1, the revenue side of the company decreased by about 9%, and the net profit deducted from non parent company decreased by about 3%. The gross profit margin was 30.14%, with a year-on-year increase of about 1.6pct, and the net profit margin was 9.58%, with a year-on-year increase of 2.2pct. Previously, the company’s annual report disclosed that according to the industry characteristics, market conditions and profit margin change trend, we judged that the pharmaceutical commercial business with low profit margin in 2022q1 may decline more, resulting in the increase of the proportion of toothpaste with high profit margin. According to the business data of each line disclosed in the annual report of the company in 2021, in the second half of 2021, the revenue of the subsidiary of health products decreased by 3.8% and that of the parent company (pharmaceutical industry) decreased by 17.1%, which is significantly different from the rapid growth trend in the first half of 2021. We judge that part of the reasons for the decline of the company’s revenue in 2022q1 are consistent with that in the second half of 2021 and disturbed by the epidemic. In addition, the company’s revenue grew rapidly in 2021q1, reaching 33.38%. The high base may also put some pressure on 2022q1.
Cash flow remains adequate. From other financial indicators, the net operating cash flow of 2022q1 company is – 170 million yuan, which may be caused by the slow speed of business collection (especially pharmaceutical business) under the epidemic. The net profit margin of non deductible sales reached 14%, with a year-on-year increase of about 0.8pct, which may be caused by the change of business structure. Other non current assets amounted to RMB 11.961 billion, and Shanghai Pharmaceuticals Holding Co.Ltd(601607) equity was obtained for strategic investment. The company’s cash balance at the end of the period was 10.67 billion yuan, and the cash flow was still sufficient to support the development of subsequent projects.
Extension force, strategic investment, drug application and landing. On April 13, 2022, the company announced that Shanghai Pharmaceuticals Holding Co.Ltd(601607) 665626796 new A shares obtained from the company’s strategic investment transaction had been registered and officially included in the register of shareholders of Shanghai Pharmaceuticals Holding Co.Ltd(601607) accounting for 18.01%. In addition, the company announced on April 15 that through the tender offer, the company and its persons acting in concert held 78.56% of the issued shares of Bandung holdings. Profit forecast: without considering the impact of strategic investment Shanghai Pharmaceuticals Holding Co.Ltd(601607) for the time being, it is estimated that the net profit attributable to the parent company in 20222024 will be 4.75 billion yuan, 5.39 billion yuan and 5.98 billion yuan respectively, with corresponding growth rates of 69.5%, 13.5% and 10.9% respectively; EPS is 3.70 yuan, 4.20 yuan and 4.66 yuan respectively, and the corresponding PE is 20x, 18x and 16x respectively. Maintain the “buy” rating.
Risk tip: the growth rate of toothpaste slows down; The incentive effect is less than expected; The progress of new business is less than expected; The investment income fluctuates greatly and disturbs the performance; The rise of raw materials led to the decline of gross profit margin
