Yunnan Baiyao (000538) Quarterly Review: Slightly accelerated in the third quarter

The third quarter was in line with expectations on October 28. The company announced the third quarterly report, and its revenue from 1-3Q19 was 21.6 billion (失败:重查+8).

4% yoy), net profit attributable to mother 3.5 billion (+7.

5%), deducting non-net profit 23.

400 million (-7.

3% YoY), and the performance growth was in line with our expectations.

We expect EPS 3 in 2019-21.

33, 3.

69, 4.

00 yuan, corresponding to the growth rate of 10%, 11%, 9%, with reference to historical evaluation (mean PE average of 26x in the past 8 years), given 2020 PE estimate of 26-30x, target price of 95.


70 yuan (previous value was 86.


76 yuan), maintaining the “overweight” level.

Pharmaceuticals: The performance in the third quarter is outstanding. It is expected that the endogenous growth will be stable in the future. Pay attention to the potential extension of the 1-3Q19 revenue growth of the pharmaceutical company-based parent company.

3% to 39.

9 ‰ (an 北京夜网 increase of 27% year-on-year in the third quarter of 19), the gross profit margin fell by 0.

8pct to 54.

8%, simple endogenous profit (2).

3% (3rd quarter of 19 + 10% year-on-year).

We believe that the endogenous growth of the pharmaceutical sector will be stable in the future, and the incremental dependence on epitaxy: 1) In the third quarter, the main products (white medicine series) and devices (eye masks, etc.) will perform better, and the performance of specialty drugs will be average; 2) The price increase benefits of white medicine series in recent years are allThe channels are inclined, and the redistribution of benefits will not be ruled out in the future; 3) Extension will become the main increment of the Pharmaceutical Department. At present, the company’s extension is focused on the orthopedic direction, with joint materials as the focus.

Health products, traditional Chinese medicine resources, and pharmaceutical business performance are stable. 1) We speculate that the revenue of health products 1-3Q19 maintained a rapid growth, and the gross profit margin increased. Thanks to the launch of new high-margin products, leakages under the grassroots channels and increased tax reduction; 2) We estimate that the revenue of the Ministry of Traditional Chinese Medicine Resources 1-3Q19 will maintain a steady growth. The company plans to develop a new model of health and wellness based on the “Baiyao Health Cloud Platform”. Currently, the city’s airports, high-speed rail and tourist areas will open stores, and regional expansion is planned in the future. 3) WeIt is expected that the pharmaceutical business revenue will continue to increase from 1-3Q19. In recent years, the growth depends on the acquisition of small companies in the region. The future growth momentum comes from the supply chain extension of chain pharmacies and hospital pharmacies.

The operating rate was stable during the period 1-3Q19. The selling rate was generally on the rise: the selling rate remained flat at about 13% per second, and the management rate continued to rise to 0.

6 points to 1.

9%, R & D expenses increased by 0 in ten years.

1pct to 0.

5%, the financial rate drops by 0 every year.

3pct to 0.


19-1-3Q19 income and cash ratio was 106%, and the repayment was smooth.

The improvement of the layout is open, waiting for the executives to be fully in place. In October, the company completed the repurchase plan in advance. It is planned to use the 3.3 million shares that have been repurchased at half the average repurchase price (37.

07 yuan), awarded to no more than 485 employees (including 13 supervisors and supervisors), and also introduced cash incentives, accrued 15% of the annual net profit increase as the bonus of the year, basically announced the company’s long-term incentives and improvements.

Since then, the company has subscribed for the Bandung Holdings convertible bonds (a Hong Kong company with extensive personal care experience and intends to enter industrial marijuana), invest in Chinese antibodies (many of the monoclonal antibodies under investigation are related to rheumatoid arthritis), and become more open.Excellent strategic thinking.

Currently, the board of directors is actively looking for CEOs on a global scale. We believe that the corporate governance structure will be further optimized and wait for the CEO’s arrival.

Risk reminder: Shareholder incentives are lower than expected, and outbound M & A falls short of expectations.