Guang Yuyuan (600771): Consolidating operations to improve quality

Event: The company released a quarterly report for the year of 19. The revenue, net profit attributable to mothers and net profit attributable to non-mothers were 2, respectively.

7.1 billion, 57.31 million and 41.93 million, respectively -7 twice.

56%, +10.

99% and -17.

86%. During the period, the company received government subsidies of 22.59 million yuan, which increased the growth rate of net profit attributable to mothers.

Opinions are as follows: digesting channel inventory, we estimate that terminal sales are good.

19Q1 revenue decline, we estimate that the company proactively adjusted the sales structure and digested the channel inventory. At the same time, we estimate that the terminal mobile sales maintained a rapid growth of more than 30%.

Repayments improved, and the quality of operations gradually improved.

In 19Q1, the company’s operating net cash flow was 11.15 million yuan, which has been positive for the first time since 18Q1.

The cash received for selling goods in 19Q1 was 3.

US $ 2.1 billion, the first quarter of three years since the company’s sales of goods received a positive difference between cash and operating income (+50 million). The smallest quarter before was also -60 million.Significant improvement in sales receipts.

Accounts receivable in 19Q114.

4.9 billion yuan, +1 from the beginning of the period.

USD 1.1 billion, but at the same time the bills receivable decreased by 1.

About 7.1 billion, we estimate that the company reduced the form of bills and increased receivables. Looking at 19Q1 accounts receivable + bills receivable, the trend is declining.

Other financial data: 19Q1 gross profit margin 77.

69%, a decrease in gross profit margin 3 years ago.

For 43 partnerships, we estimate that the book value is mainly 6.

4 billion Chinese medicine industry projects and 1.

After the 9.9 billion Chinese medicine technology R & D center project was solidified in 18Q4, depreciation increased.

In 19Q1, the sales expense ratio and management expense ratio increased by 2 respectively compared with 18 years.

83 digits and 3.

It is 18 digits, but it is significantly lower than the corresponding annual cost rate in 16/17.

The development cost of 19Q1 is 12 million yuan, + 207% per year. Our estimate is mainly due to the increase in the phase IV clinical projects of classic Chinese medicine.

Looking forward to the release of the dividend of Ding Kundan’s new base medicine list.

Ding Kundan entered the new version of the basic medicine list during the 18-year adjustment. Currently, each new version of the basic medicine list is still being implemented. After implementation, it is expected to increase Ding Kundan’s coverage and sales in primary medical institutions.

Profit forecast: We expect the company’s net profit attributable to mothers to increase by 10%, 36% and 30% in 19-21, corresponding to an EPS of 1.

17/1.

59/2.

06 yuan, currently corresponding to 19pe estimated 28x.

Adjusted to “Careful Recommendation-A”.

The company’s national 杭州桑拿 sales network has been formed, and cooperation with major terminals has begun to get better.

We expect 19 years to be a key year for the company to consolidate its sales performance, optimize receivables and improve cash flow, wait for the company’s accumulated accumulation and subsequent performance to take off, and give it a “prudent recommendation-A” rating.

Risk warning: product sales are not up to expectations; bad debt risk; production and operation risk.