Liuyao Pharmaceutical (603368) Interim Review: Industrial and Retail Growth Grows Brightly, Profitability Increases Significantly

Liuyao Pharmaceutical (603368) Interim Review: Industrial and Retail Growth Grows Brightly, Profitability Increases Significantly


Event: The company released its 2019 Interim Report.

In the first half of 2019, the company realized revenue 71.

97 ppm, an increase of 30 in ten years.

47%; net profit attributable to shareholders of listed companies3.

560,000 yuan, an increase of 39 in ten years.

35%; net profit attributable to non-attributed mothers3.

500,000 yuan, an increase of 37 in ten years.

twenty two%.

Implement EPS 1.

38 yuan.


Our Analysis and Judgment (1) Retail and Industrial Sectors Drive High-performance Growth Companies Retail and Industrial Sectors drive high-performance growth companies.

The company’s revenue in the first half of 2019 increased by 30%.

47%, net profit after deducting non-attribution increased by 39.

35%, the company’s rapid growth mainly benefited from the high growth of the retail and industrial sectors.

The company’s wholesale income in the first half of the year was about 61.

3.1 billion, accounting for 85.

73%; retail revenue is about 8.

6.8 billion, accounting for 12.

09%; industrial income is about 1.

8 billion, accounting for 2.


Although the company’s total revenue is still dominated by the wholesale business, the rapid growth in retail and industrial revenue has become an important performance growth point for the company.

Both the endogenous and extension of the retail business maintained rapid growth.

The company achieved retail business revenue in the first half of 20198.

68 ppm, an increase of 52 in ten years.


Excluding the consolidation effect of Xinyou and Pharmacy acquired last year, the company’s retail revenue would be approximately 7.

880,000 yuan, an endogenous growth of 38.


As of June 30, 2019, the company had a total of 547 pharmacies, referring to a net increase of 104 stores at the end of 2018; including 341 medical insurance pharmacies and 82 DTP pharmacies.

In the first half of the year, the company’s retail business did not have large-scale acquisitions, and the new stores were basically self-built.

The rapid growth of the industrial sector mainly benefited from the enhancement of the capabilities of Vantone consolidated tables and Chinese herbal medicine pieces of Xianzhu.

The company’s industrial sector achieved revenue in the first half of 20191.

80 ppm, a 270-year increase.

The explosive growth of the company’s industrial segment was mainly affected by the consolidation of Wantong Pharmaceutical acquired in the fourth quarter of last year. In the first half of the year, Wantong Pharmaceutical realized revenue of approximately 77 million yuan.
Even after excluding Wantong’s revenue, the company’s industrial sector still grew by more than 100%, mainly due to the significant increase in the processing capacity and output value of the Chinese medicine decoction pieces.

Wholesale business channels sink, and varieties continue to be optimized.

The company’s wholesale business in the first half of 2019 achieved revenue 61.

31 ppm, an increase of 25 in ten years.


The company actively deploys the third terminal and penetrates into the county and township grassroots markets. The third terminal and transfers in the wholesale business currently account for the total proportion.


The company continued to speed up the development of equipment consumables and achieved a wholesale income of about 2 in equipment consumables.

8.9 billion, an annual increase of 33.


The company has also expanded supporting value-added services such as hospital supply chain extension services, equipment consumables SPD projects, etc. to increase customer stickiness. (2) Benefiting from the growth of high gross profit business, the company’s profitability has improved significantly and the proportion of retail and industrial revenue with high gross profit has continued to increaseThe company’s gross profit margin increased significantly.

In the company’s overall business in the first half of 2019, the gross profit margin of the wholesale sector was 8.

85%, the gross profit margin of the retail sector is 25.

04%, the gross profit margin of the industrial sector is 53.


In the end, the proportion of industrial and retail business with higher gross profit margins continued to increase, driving the company’s overall gross profit margin to increase.

The gross profit margin of the company’s industrial segment increased significantly, mainly due to the higher gross profit margin of the acquired Wantong.

The company ‘s largest proportion of the wholesale business has also continued to increase its gross profit margin. In addition to the pure-sale business, which has a higher gross profit margin due to the two-vote system, has replaced the gross margin conversion allocation business, the company has actively adjusted its product structure and vigorously promoted value-added services.Promoted the improvement of the gross profit margin of the wholesale business The company achieved a gross profit margin in the first half of 201912.

12%, an increase of 1.

89 units; net margin achieved 5.

47%, an increase of 0 over the same period last year.

59 uniforms.

Specific to statutory expenses, the company realized a sales expense ratio of 2.

30%, a year increase of 0.

30 units; management expense ratio 1.

98%, an increase of 0 every year.

29 units; financial expense ratio is 0.

90%, increase by 0 every year.

52 units.

We believe that the increase in the company’s sales expense ratio is partly due to the launch of Vantone’s sales force; the company’s management expense ratio has increased in part due to new retail openings, depreciation, rental and renovation costs.

As the company ‘s gross profit margin increased by more than the budget expense ratio, the 杭州夜网论坛 company ‘s net margin improved and its profitability improved significantly.

(3) As a regional circulation leader, the company has reorganized immunity to policy shocks. In general, the medical reform policy continues to advance, measures such as centralized volume purchase and expansion, two-voice system for equipment, and collection of medical consumables will be implemented successively.Circulation faucet has intervention immunity to policy.

The company’s market share in Guangxi’s pharmaceutical distribution market has expanded, and it is the largest pharmaceutical distributor in Guangxi.

Focusing on the company’s leading position in the local area and the good cooperation relationship with local hospitals, when the Guangxi local medical reform policy was introduced, the company’s business could seize the opportunity, 南京桑拿网 adjust its layout, and actively seize market share of scale.

For example, although the centralized purchase of drugs will lead to a sharp decline in drug prices, due to the large purchase volume, as long as the company can win the unified distribution right of these quantities, the final profit will be almost unaffected.

In addition, Guangxi is expected to launch the province’s GPO model in the second half of the year.

It is expected that higher requirements will be put forward by expected distributors, distribution varieties, and repayment accounts.
The company will also take advantage of its large market share in the pharmaceutical distribution market in Guangxi, actively participate in the Guangxi GPO model, and grab more market share.

(IV) The company’s estimate is low. The continuous improvement of the pharmaceutical distribution policy environment continued on August 14, and the company’s price-to-earnings ratio (TTM) was 14.

31. The median price-to-earnings ratio (TTM) of Shenwan’s third-level pharmaceutical industry is 16.
19. The company’s P / E ratio is lower than the industry median.

Considering that the company’s existing product structure is optimized, profitability is enhanced, and the pharmaceutical industry has great potential for future growth, we believe that the company’s current estimate is undervalued and has investment value.

In addition, national policies have helped the pharmaceutical business reach its inflection point.

With the end of the implementation of the “two-vote system”, the impact on the industry’s interest rate has been eliminated, and the industry performance growth has reached an inflection point.

At the same time, the general pharmaceutical policy aims to improve the pressure on drug companies to pay back, and the recent centralized purchase policy has also emphasized the need to ensure the speed of payment to companies. We believe that there has been a financial pressure on pharmaceutical businesses for a long time to promote recoveryThe industry’s operating environment has improved.

As a lightweight regional leader in the industry, the company has investment value.


Investment recommendations The company’s performance is excellent, and we are optimistic about the company’s future development prospects.

First, we are optimistic about the rapid growth prospects of the company’s retail and industrial sectors.

The company’s retail business integration has a good relationship with hospitals and the advantages of “unified integration”. It has vigorously developed the layout of chain pharmacies, and has obvious advantages in DTP pharmacies, hospital stores, and undertaking prescription drug outflow.

The industrial sector of the company just acquired Vantone Pharmaceuticals, and began to exert force through Vantone sales. Vantone varieties promote rapid volume.

In fact, we are highly optimistic about the prospect of the company having a regional leader in Guangxi for market integration.

The company’s regional advantage in Guangxi has enabled it to integrate the wholesale market under measures such as the “two-vote system” and seize the opportunity to formulate medical reform policies and win more market share.

Finally, we are optimistic about the product structure adjustment of the company’s wholesale business.

The company’s wholesale business actively distributes higher-margin varieties, and equipment supplies grow faster, gradually increasing the profitability of the wholesale business.

We are optimistic about the potential for rapid growth of the company’s future performance and predict that the net profit attributable to mothers will be 6 in 2019-2021.



79 trillion, corresponding to EPS 2.



55 yuan, corresponding to PE is 12.



63 times.

Maintain the “Recommended” level.


Risks suggest that the integration of the wholesale market is less than expected risks, the chain drug store layout is less than expected risks, and the volume of industrial products is less than expected risks.