Liuyao (603368) 2019 Interim Report Comments: Performance Continues to Exceed Expectations

Liuyao (603368) 2019 Interim Report Comments: Performance Continues to Exceed Expectations

Company dynamics The company released its semi-annual report for 2019.

Matter comments The performance continued to exceed expectations for the second quarter, and the wholesale business maintained rapid growth. The company achieved operating income of 71 in the first half of 2019.

9.7 billion, an annual increase of 30.

47%; net profit attributable to mothers3.

5.6 billion, an annual increase of 39.


By quarter, the company achieved operating income of 38 in Q2 2019.

100,000 yuan, an annual increase of 35.

86%; net profit attributable to mothers1.

9.6 billion, an annual increase of 37.

50%, the company’s 2019 performance for two consecutive quarters exceeded market expectations.

The company’s controlling subsidiary Wantong Pharmaceutical realized net profit of 33.44 million yuan in 2019H1. Excluding the impact of consolidation factors, the company’s net profit growth attributable to its parent in 2019H1 was approximately 31%.

In terms of business, the company’s wholesale business revenue in 2019H1 exceeded the growth rate by about 25%, of which the hospital sales business achieved revenue of 53.

8.2 billion, an annual increase of 27.

98%, maintaining rapid growth.

The company continued to promote the hospital supply chain extension service project and reorganize.The company’s 2019H1 and Yulin Second People’s Hospital, Hechi Third People’s Hospital and other medical institutions changed the logistics extension project cooperation agreement, which continued until the end of June 2019. The company has reduced the project agreementThe number of medical institutions reached 68; expansion, the company actively expanded the scope of cooperation, promoted the cooperation of projects such as equipment consumables SPD, further consolidated customer relationships, and boosted market share.

The company’s 2019H1 medical device sales reached 2.

8.9 billion, an annual increase of 33.

60%, the use of hospital supply chain extension service projects to rapidly promote equipment, consumables distribution service platform, and the establishment of a joint venture with Runda Medical to develop the IVD market and other factors, led to the company’s rapid growth in medical device sales.

The retail business has clear advantages in the integration of wholesale and retail. The industrial business is expected to become the company’s new profit growth point. The company’s retail business will achieve revenue in the first half of 20198.

68ppm, an annual increase of 52.

59%, of which, the holding subsidiary Youhe Gucheng achieved revenue of 81.43 million yuan, excluding the impact of consolidation factors, the retail business in 2019H1 revenue growth rate is about 38%.

Guizhong Pharmacy, a wholly-owned subsidiary of the company, realized a net profit of 52.93 million yuan in 2019, an annual increase of 101.


As of the end of June 2019, the company had a total of 547 pharmacies, of which medical insurance stores accounted for 62.

34%, the number of DTP pharmacies reached 82. The company has the synergistic advantages of integration of wholesale and retail in Guangxi Province, the rapid expansion of overlapping stores, the strengthening of competitive advantages such as the layout of DTP pharmacies, and the retail business is expected to maintain rapid growth.

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

8 billion, an annual increase of 270.

48%, mainly due to the release of Xianxianzhu Chinese medicine technology production capacity, and the list of factors such as Wantong Pharmaceutical.

Among them, Xianzhu Chinese 重庆耍耍网 Medicine Technology 2019H1 achieved a net profit of 10.89 million yuan, an increase of 42.

25%; Vantone Pharmaceuticals achieved net profit of 33.45 million yuan in 2019H1.

The company actively extends the industrial chain, distributes to the upstream pharmaceutical industry, and plays a synergistic role with the company’s main business wholesale and retail business, which is conducive to promoting the rapid growth of industrial business and fostering new performance growth points.

The rapid growth of high gross profit formats has driven the company’s overall gross profit level to improve, and operating cash flow has improved.

12%, increase by 1 every year.

89 singles, mainly due to the company’s retail, equipment, industrial and other high-growth formats of high-speed growth caused the company’s overall income structure changes.

The company’s net operating cash flow in the first half of 2019 was -3.

5.0 billion, -5 from the same period last year.

The 01 trillion has narrowed down. According to quarters, 2019Q1 and Q2 are -3 respectively.0.5 billion, -0.

At 5.9 billion yuan, operating cash flow in Q2 2019 improved significantly from the previous quarter.

The company’s accounts receivable days are 141.

99 days with an annual increase of 3.

In 61 days, considering the rapid growth of the company’s revenue end and the continuous development of hospital supply chain extension services, the company expects that the company’s accounts receivable turnover days will stabilize.

Risk warnings: industry policy risks such as the two-vote system; the risk that the hospital supply chain extension project is not progressing as expected; the DTP business is not growing as fast as expected; risk investment recommendations are 19 to 20 years EPS to 2.

63, 3.

24 yuan, with a closing price of 33 on August 12.

98 yuan calculation, dynamic PE is 12 respectively.

91 times and 10.

50 times.

We believe that the company’s deep cultivation of Guangxi’s pharmaceutical distribution regional market has obvious channel and distribution advantages in Guangxi Province, overlapping terminal market coverage, and strong control capabilities, which have promoted the company’s wholesale business to continue to grow rapidly. As a result, the company has approvals in GuangxiIntegrated synergies, rapid expansion of expanded stores, enhanced competitive advantages such as DTP drug store layout, and retail business are expected to maintain rapid growth.

In the next six months, we will maintain a “cautious increase” rating.