金陵药业(000919.CN)

Jinling Pharmaceutical:Building two profitable platforms,Medicine and healthcare

时间:16-08-22 00:00    来源:瑞银证券

Modest recovery in drug manufacturing revenue growth

H116revenue was Rmb1.808bn (+15.34% YoY) and net profit was Rmb110m (-5.31%YoY). EPS came in at Rmb0.22. Meanwhile, Jinling maintained sound operations, with amodest recovery in manufacturing growth. Traditional Chinese medicine (TCM) revenuerose 6.39% YoY to Rmb384m in H116. In contrast, TCM product (Mailuoning) revenuefell YoY in 2014/15.

Pharma distribution revenue maintained rapid growth on resource integration

Revenue from chemical drugs was Rmb935m in H1, up 20.43% YoY. The chemicaldrug business mainly involves delivering drugs to Jinling's hospitals. As part of its pushfor supply chain integration in the healthcare services segment, Jinling linked its sales,healthcare and retail pharmacy platforms and maintained rapid growth inpharmaceutical distribution revenue. In 2013-15, chemical drugs had revenue growthof 18.65%/11.22%/23.24%.

Sustained robust growth in healthcare services

Revenue in the healthcare services segment jumped 11.31% YoY to Rmb402m in H1.With healthcare services as the key direction of its transformation, Jinling has designeddevelopment strategies for its hospitals based on their different development stages,leading to sustained robust growth in healthcare services. At Suqian Hospital, workcontinues to centre on joining the ranks of grade 3, class A hospitals. Yizheng Hospitalis using new grade 3hospital standards as its management requirements anddeveloping key specialty services, such as cardiac intervention. Anqing Hospital isfocusing on market expansion and brand building.

Valuation: Maintain Rmb17.18price target and Buy rating

Our DCF-based price target of Rmb17.18(WACC 8.2%) implies 31x 2016E PE. Webelieve the solid growth potential of Jinling's healthcare services segment has not beenfully priced in and maintain our Buy rating.