Tongrentang (600085): Compound growth expectation for long-term bullish outlook on the company

Tongrentang (600085): Compound growth expectation for long-term bullish outlook on the company

Event: The company’s operating income in 2018 is attributed to the net profit of the parent, and the non-net profit after deduction is approximately 14.2 billion, 11.

3 trillion, 10 trillion, the annual growth rate is about 6.

2%, 11.

5%, 0.

2%; In the fourth quarter of 2018, operating income was attributed to the parent’s net profit and the non-net profit was approximately 37.

300 million, 2.

900 million, 1.

600 million yuan, the annual growth rate is about 3.

9%, 43.

7%, -13.

2%.

Performance growth was in line with expectations, with better cost and expense control.

The company’s operating income is about $ 14.2 billion, with an annual growth rate of about 6.

2%, of which the pharmaceutical industry and commerce are about 84.

100 million, 75.

600 million yuan, the annual growth rate is about 3.

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2%, 11.

8%; from the perspective of the constituent companies, the parent company’s revenue is about 31.

4 ‰, an annual increase of about 7.

7%, in line with expectations; Tongrentang Technology revenue is about 50.

6 ppm, an increase of approximately 0 per year.

7%, exceeding expectations, but its subsidiary Tongrentang Sinopharm has revenue of approximately 12.

80,000 yuan, an increase of about 17 in ten years.

3%, the Hong Kong market is highly prosperous, and the accelerated growth of performance is obvious; the revenue of commercial companies is about 77.

3 ppm, an increase of about 11 per year.

7%, slightly more than expected.

From the perspective of product classification, the revenue from cardio-cerebral vascular (An Gong, Niu Qingxin, Dahuoluo series, etc.) is about 28.

40,000 yuan, an increase of about 16 in ten years.

3%; the income of supplements (Liuwei Dihuang series, Ejiao, etc.) is about 16.
.

6 megabytes, a year-on-year growth rate of about -14%; the rest such as heat, gynecological growth rate replacement.

The company’s first-level net profit is deducted from non-net profit of approximately 11.

3 trillion and 10 trillion, the annual growth rate is about 11.

5%, 0.

2%, the analysis is as follows: 1) Compensation for demolition is received, and the gain from disposal of assets is about 1.

4 ‰; 2) The company’s gross profit margin is about 47%, which exceeds the increase by about 0.

5 units.

The cost control of raw materials is better, the industrial gross profit margin has increased slightly, and the commercial gross profit margin has remained basically the same; 3) The expense ratio during the period is about 30%, and the increase is about 1.

Three candidates were mainly due to an increase in staff budget.
In the fourth quarter of 2018, operating income and non-net profit after deduction were approximately 37.

300 million, 1.

600 million yuan, the annual growth rate is about 3.

9%, -13.

2%, the single quarter profit growth rate is negative, mainly due to the current period, the loss of inventory depreciation was nearly 1.

300 million.

The leading Chinese medicine company has long been optimistic about the company’s development.

1. The policy benefits are obvious, and the reform of state-owned enterprises is worth looking forward to.

a. The state has penetrated into the support of the Chinese medicine industry, such as encouraging the use of Chinese medicine decoction pieces and developing traditional Chinese medicine formula granules, which can support the development of traditional Chinese medicine.

And after the “Traditional Chinese Medicine Law” was formally implemented, the first batch of classic classics was launched, and the company’s classic classics are rich in reserves or ushered in a revaluation, which will significantly enhance the competitiveness of its product lines; b, the expected strength of state-owned enterprise reform.

The company’s state-owned shares are approximately 52.

5%, as a key enterprise in Beijing, is expected to promote the reform of state-owned enterprises, or start employee incentives and asset injection; 2. Good consumption upgrade, multi-channel expansion to promote sales growth.

a. The improvement of residents’ income level drives the consumption of health care.

The property of the brand Chinese medicine for treating diseases has increased and gained popularity, and it is obviously affected by consumption upgrade.

The sales volume of gold single product Angong Niuhuang Wan is consistent, and has strong price increase expectations; b. Speed up the layout of retail pharmacies, e-commerce and other channels to increase brand barriers through self-construction and cooperation.

The company currently has more than 800 retail pharmacies. Recently, Beijing launched a policy of designated medical insurance pharmacies to guide the outflow of prescriptions. The company’s pharmacies are relatively complete and well-known, and it is expected to benefit significantly. C. The company’s channel and brand advantages are obvious, and Daxing infrastructure has effectively used;3. Potential growth potential in overseas markets.

The subsidiary’s Tongrentang Sinopharm business has covered 21 countries and regions, with 81 retail terminals, and continues to expand to the Hong Kong market and overseas markets, which is expected to boost its brand and performance.

Profit forecast and rating.

We expect the expected earnings for 2019-2021 to be zero.

92 yuan, 1.

01 yuan, 1.

11 yuan, corresponding to PE is 32 times, 29 times, 26 times.

The company has abundant product reserves, smooth overseas business development, and potential potential catalysts such as state-owned enterprise reform and price increases. It maintains an “overweight” rating.

Risk Warning: Product sales may not meet expectations, and market expansion may not meet expectations.