20180827-招商证券_香港_-华润医药-03320.HK-Margin_expansion_made_the_day_7页_1mb

报告摘要

CR Pharmaceutical (3320 HK) Summary Report

Core Content

This report provides an analysis of CR Pharmaceutical (3320 HK), a Hong Kong-listed pharmaceutical company, highlighting its financial performance, valuation, and investment ratings for the period of 2018 and 2019. The key focus is on the company's margin expansion, revenue growth, and its strategic position in the pharmaceutical and healthcare sector.

Main Points

Financial Performance Highlights

Revenue Growth:
- 1H18: 9.7% growth
- 2018E: 9.4% growth
- 2019E: 9.4% growth (slightly lower than 2018E)
Net Profit Growth:
- 1H18: 16.2% growth
- 2018E: 21.5% growth
- 2019E: 21.5% growth
EPS Growth:
- 1H18: 19% CAGR
- 2018E: 15.8% growth
- 2019E: 21.8% growth
Margin Expansion:
- Gross margin increased by 1.5 p.p. in 1H18 to 18.5%
- Operating margin rose by 0.1 p.p. to 6.5%
- Net margin improved by 0.1 p.p. to 2.1%

Key Drivers of Performance

Pharma Manufacturing:
- Revenue growth of 15%–16% (RMB)
- Strong gross margin expansion
Distribution & Retail:
- Direct sales increased by ~20%, contributing to a 1 p.p. rise in GPM
- Overall distribution revenue growth was weaker due to the sequence of two invoices (impact on GD in 2Q)
Sanjiu's TCMG Sales:
- Reaccelerated to ~25% growth (RMB)
OTC Portfolio Optimization:
- Continued optimization post-acquisition of Jiangzhong Pharma
- Expected to contribute ~1% to EPS in 2019E

Main Negatives

Ejiao Sales: Flat in 1H18 with falling net profit
Distribution Revenue Growth: Only 1% growth in RMB terms
Interest Charges and Gearing: Higher than expected

Investment Recommendation

Rating: BUY
Reason: Stock is undervalued (below 1x PEG) with strong earnings growth prospects
Target Price (TP): HK$14.3 (upgraded from HK$12.3)
Potential Upside: 20% from previous TP

Valuation

SOTP-Based TP: HK$14.3 (18x 2019E PER)
Valuation Multiples:
- Pharma manufacturing: 15x NOPAT
- Pharma distribution & retail: 14x NOPAT
Net Debt at End 2018: HK$29,865 million
Financial Assets at End 2018: HK$2,085 million
Equity Value at End 2018: HK$90,006 million
Net Margin: Improved to 2.4% in 2019E

Market Position and Performance

Sector: Pharmaceutical & Healthcare
Market Cap (HK$ mn): 75,163
Avg. Daily Volume (mn): 5.82
BVPS (HK$): 6.66
Shareholding Structure:
- China Resources National Corporation: 53.0%
- Beijing Pharmaceutical Investment Ltd: 17.7%
- Hengjian Intl Investment: 4.6%
Free Float: 34.5%

Comparative Analysis

HK Listed Peers

Ticker	Name	Last Price	Mkt Cap (USD mn)	Rating	TP	Upside (%)	P/E Ratio (17A)	P/E Ratio (18E)	P/E Ratio (19E)	P/B Ratio (17A)	P/B Ratio (18E)	P/B Ratio (19E)	ROE (17A)	ROE (18E)	ROE (19E)	EV/EBITDA Ratio (17A)	EV/EBITDA Ratio (18E)	EV/EBITDA Ratio (19E)
1099 HK	SINOPHARM-H	36.8	12,972	-	28.1	39%	14.7	16.2	14.4	2.2	2.2	2.0	15.8	14.5	14.9	7.8	8.0	8.3
2607 HK	SHANGHAI PHARM-H	20.3	8,347	BUY	28.1	39%	14.4	12.9	10.3	0.8	0.7	0.6	8.9	8.4	11.2	9.7	9.8	9.8
3320 HK	CHINA RESOURCES	12.0	9,575	BUY	14.3	20%	21.7	18.7	15.2	1.8	1.7	1.2	8.8	9.3	8.2	7.8	8.0	7.0
867 HK	CHINA MEDICAL SY	14.3	4,531	-	-	-	22.5	15.9	13.5	5.2	3.5	3.0	24.8	24.3	24.0	20.6	13.0	11.1
1345 HK	PIONEER PHARM	2.0	332	-	-	-	9.1	N.A.	N.A.	2.3	N.A.	N.A.	N.A.	24.8	N.A.	N.A.	7.6	N.A.

A-Share Listed Peers

Ticker	Name	中文名	Last Price	Mkt Cap (USD mn)	P/E Ratio (17A)	P/E Ratio (18E)	P/E Ratio (19E)	P/B Ratio (17A)	P/B Ratio (18E)	P/B Ratio (19E)	ROE (17A)	ROE (18E)	ROE (19E)	EV/EBITDA Ratio (17A)	EV/EBITDA Ratio (18E)	EV/EBITDA Ratio (19E)
601607 CH	SHANG PHARM - A	上海医药	21.2	8,347	13.4	14.8	13.0	1.4	1.5	1.4	8.9	8.4	11.2	9.7	9.7	8.2
600998 CH	JOINTOWN PHARM - A	九州通	15.2	4,187	21.8	20.5	16.2	2.4	1.6	1.5	24.8	24.3	24.0	20.6	13.0	11.1
600056 CH	CHINA MEHECO C-A	中国医药	17.2	2,698	20.5	11.5	9.3	3.4	3.0	3.0	24.8	24.3	24.0	20.6	13.0	11.1
000028 CH	CHINA NATIONAL-A	国药一致	47.5	2,811	12.9	16.9	14.7	2.0	2.0	2.0	11.9	13.2	15.4	15.7	12.5	12.1
600511 CH	CHINA NATIONAL-A	国药股份	26.0	2,921	17.9	N.A.	N.A.	2.6	2.1	2.1	8.9	N.A.	N.A.	13.8	N.A.	N.A.
002589 CH	REALCAN PHARMA-A	瑞康医药	12.3	2,711	20.1	14.0	11.0	3.1	2.5	2.5	13.7	13.9	15.0	12.2	9.3	7.4
603883 CH	LAOBAIXING PHA-A	老百姓	68.2	2,849	45.6	41.6	32.9	6.1	5.5	4.5	10.0	11.5	10.7	10.5	9.8	8.2
603939 CH	YIFENG PHARMA-A	益丰药房	58.1	3,090	52.6	49.8	37.8	5.2	5.9	5.3	10.2	12.0	14.2	10.5	9.8	8.2
002727 CH	YUNNAN HONGXIA-A	一心堂	27.2	2,267	25.2	28.3	23.1	3.1	3.7	3.3	13.7	13.9	15.0	12.2	9.3	7.4
603716 CH	WUHAN THALYS M-A	塞力斯	16.7	503	37.5	22.0	15.8	3.8	2.6	2.2	10.6	12.7	15.4	12.7	9.8	7.4

Investment Ratings

Industry Rating: OVERWEIGHT
Company Rating: BUY

Analyst Disclosure

The analysts responsible for this report certify that the views expressed accurately reflect their personal opinions on the subject securities and that their compensation is not directly or indirectly related to the specific recommendations or views in the report.

Regulatory Disclosure

Please refer to the important disclosures on the CMS HK website for further details.

Disclaimer

This document is prepared by China Merchants Securities (HK) Co., Limited and is for informational purposes only. It is not an offer or solicitation to buy or sell any security, financial instrument, or investment product. The securities, instruments, or strategies discussed may not be suitable for all investors.

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