Tonghua Dongbao (600867): Insulin growth stabilizes traditional business and sales expenses affect profit growth

Tonghua Dongbao (600867): Insulin growth stabilizes traditional business and sales expenses affect profit growth
Event: On October 22, 2019, the company released the 2019 third quarter report.The company achieved operating income of 20 in the first three quarters of 2019.57 ppm, a ten-year increase2.41%; net profit attributable to mother 6.880,000 yuan, an increase of 0 in ten years.08%; net profit deducted from non-return to mother 6.88 ppm, a 10-year increase3.40%. The growth rate of insulin stabilized, and the expansion of traditional business and the expansion of sales expenses affected the growth rate of profits.In the first three quarters of 2019, the company achieved net profit attributable to mothers6.880,000 yuan (0.08% +), slightly lower than expected.Among them, the third quarter achieved a single quarter of operating income6.2.3 billion (14.14% +), net profit attributable to mother 1.5.6 billion (3.37% +), and there was a slight increase in certain base ratios after adjustment of channel inventory in the third quarter of 2018.The parent company achieved revenue of 19 in the first three quarters.5.1 billion (12.37% +), net profit 6.6.3 billion (5.34% +), in the third quarter, it achieved revenue of 5 in a single quarter.9.5 billion (35.05% +), net profit 1.5.3 billion (20.53% +).We expect the parent company’s human insulin business to achieve a steady growth of about 10% in the first three quarters, and 杭州桑拿 the third quarter has gradually recovered from last year’s adjustment; the real estate and Chinese medicine business dragged down the statements, resulting in low profit growth.The company’s third quarter gross margin was 74.40%, basically stable; net interest rate is 25.06%, affected by the breakthrough of sales expenses expenditure (increased by 21%), affecting about 10 percentages of the level of net interest rate. Preparing for new products such as insulin glargine resulted in a 20% annual increase in sales expenses and the remaining financial indicators were basically normal.In terms of expense ratio, the company’s sales expense ratio is 27.07%, advance 4 shares per share in advance, the absolute value of the cost is 5.570,000 yuan, an increase of 20 in ten years.67%.Management expenses 1.17 trillion, research and development costs of 55.8 million yuan, the total cost rate level is 8.About 4%, about 1 unit per year.Net cash flow from operating activities 9.470,000 yuan, an increase of 32 in ten years.48%; repayments are in good condition, mainly due to duplicate deposit maturity and reduced payment for purchase of materials.Accounts receivable and notes 5.98 ppm, accounting for 29% of revenue, and the excess proportion is basically flat. It is expected that channel inventory will basically enter a normal state.Inventory 6.72 ppm, accounting for 13% of assets, basically unchanged from the end of 2019H1 period, maintaining stability. Profit forecast and investment advice: We expect the company’s operating income to be 29 in 2019-2021.01, 34.48, 39.38 ppm, a ten-year increase of 7.72%, 18.87%, 14.21%, net profit attributable to parent company is 9.89, 12.44,15.20 ppm, an increase of 17 in ten years.89%, 25.79%, 22.24%, corresponding to EPS.49, 0.61, 0.75 yuan.The company is the leading company in the market share of domestic second-generation insulin products. The new product insulin glargine is expected to be listed in 2019, and it maintains a “buy” rating. Risk warning: the risk of intensified competition for second-generation insulin; the risk of new product approval being less than expected; the development of chronic disease management platform being less than expected; the risk of being adjusted less than expected; the risk of drug price reduction.