标题：SinocareComments on 2015 Results：Arrival of upward inflection point for profit growth and promising deployment in new markets
发布日期：2016-02-03 14:38:14
内容： Investment Highlights: 2015 EPS of Rmb0.55 slightly lower than expectation. During 2015,the Company raked in revenue and net profit of Rmb646mn andRmb144mn, +18.64% and -27.20% YoY respectively. Of which, growthof net profit after non-recurring P/L came in at -29.50% and full year2015 EPS 0.55 (slightly disappointing). In 4Q2015 alone, its revenuetallied Rmb158mn, down by 8.14% QoQ, and net profit of Rmb15mn(-62% YoY). Core business revenue maintained sound growth despiteremarkable drag by overseas M&A and selling expenses. In1Q2015, the Company bid for Bayer’s glucose meter asset overseasand we forecast the overall expense to be ~Rmb24mn. In addition, oneof the Company’s subsidiaries completed acquisition of NIPRODIAGNOSTICS, INC. (NIPRO) in 4Q2015, and the Company set up adedicated arm to manage overseas businesses. As such, theCompany’s administrative expenses rose by 35.99% YoY in 2015,weighing on its 2015 profit remarkably. In addition, in 2015, theCompany continued stepping up efforts in marketing for services that itshospital assets offered. As a result, 1) its selling expenses jumped by67.23% YoY, 2) salary/remuneration expenses rocketed by 141.5%YoY for a marketing team and a retail team. We anticipate its hospitalassets to turn around from loss-making. In 2015, its revenue grew by18.64% YoY. On the retail market, its glucose meter businessmaintained sound growth. We expect this core business to maintainmid- to high-speed growth in the future through product mix adjustmentand penetration into more lower-level channels plus stable demand tobe obtained through overseas orders. Upward inflection point for profit growth expected to emerge in2016 when the Company completes acquiring 100% stake ofNIPRO. In 2015, the Company’s subsidiary completed acquisition ofNIPRO in the US, whose glucose meter business ranks the 3rd place inUS market and 6th place in global market. This firm boasts globallyleading manufacturing process and technologies as well as brandimage. This acquisition will achieve resource sharing and synergiesbetween the parties. The Company will likely leave its foot prints inglobal market through the acquisition target’s marketing channels andexperience while penetrating into Chinese hospitals rapidly withNIPRO’s advantages in R&D and technologies in the pipeline. Overnext two years, we anticipate the Company’s profitability to escalate fastwith NIPRO marks up product prices and the Company integrates itssupply chain effectively. We forecast NIPRO will likely register no lessthan US$10mn and US$15mn in net profit for 2016 and 2017 and boostprofits of the Company remarkably in 2016 when the acquisition of itsentire stake will be completed. Risks: Disappointing rise in penetration rate of glucose monitoring devices and launch of newtechnologies for glucose monitoring. Reiterate BUY rating. In 2015, the Companyˇs profit growth slowed down considerably due to M&Asand increased input into hospital assets. In 2016, its profit growth will likely soar as the one-off factorsdisappear and results of acquired overseas assets will be consolidated into its statements. Excludinginfluence of consolidating overseas assets (as it remains uncertain when the Company will acquire theremaining stake of the target company), we cut the Companyˇs 2016-18E EPS forecasts to0.65/0.81/1.04 (diluted 2015 EPS at Rmb0.42 and original 2016/2017E EPS forecasts at Rmb0.97/1.31).We expect overseas M&As to accelerate the Company tapping overseas markets and high-end glucosemeter market in China. Given its advantages in glucose monitoring resources that it has integratedvertically and deployment in mobile health care, we set the Companyˇs TP at Rmb30.78 and reiterate ourBUY rating.
发布日期：2016-02-03 14:38:14
内容： Investment Highlights: 2015 EPS of Rmb0.55 slightly lower than expectation. During 2015,the Company raked in revenue and net profit of Rmb646mn andRmb144mn, +18.64% and -27.20% YoY respectively. Of which, growthof net profit after non-recurring P/L came in at -29.50% and full year2015 EPS 0.55 (slightly disappointing). In 4Q2015 alone, its revenuetallied Rmb158mn, down by 8.14% QoQ, and net profit of Rmb15mn(-62% YoY). Core business revenue maintained sound growth despiteremarkable drag by overseas M&A and selling expenses. In1Q2015, the Company bid for Bayer’s glucose meter asset overseasand we forecast the overall expense to be ~Rmb24mn. In addition, oneof the Company’s subsidiaries completed acquisition of NIPRODIAGNOSTICS, INC. (NIPRO) in 4Q2015, and the Company set up adedicated arm to manage overseas businesses. As such, theCompany’s administrative expenses rose by 35.99% YoY in 2015,weighing on its 2015 profit remarkably. In addition, in 2015, theCompany continued stepping up efforts in marketing for services that itshospital assets offered. As a result, 1) its selling expenses jumped by67.23% YoY, 2) salary/remuneration expenses rocketed by 141.5%YoY for a marketing team and a retail team. We anticipate its hospitalassets to turn around from loss-making. In 2015, its revenue grew by18.64% YoY. On the retail market, its glucose meter businessmaintained sound growth. We expect this core business to maintainmid- to high-speed growth in the future through product mix adjustmentand penetration into more lower-level channels plus stable demand tobe obtained through overseas orders. Upward inflection point for profit growth expected to emerge in2016 when the Company completes acquiring 100% stake ofNIPRO. In 2015, the Company’s subsidiary completed acquisition ofNIPRO in the US, whose glucose meter business ranks the 3rd place inUS market and 6th place in global market. This firm boasts globallyleading manufacturing process and technologies as well as brandimage. This acquisition will achieve resource sharing and synergiesbetween the parties. The Company will likely leave its foot prints inglobal market through the acquisition target’s marketing channels andexperience while penetrating into Chinese hospitals rapidly withNIPRO’s advantages in R&D and technologies in the pipeline. Overnext two years, we anticipate the Company’s profitability to escalate fastwith NIPRO marks up product prices and the Company integrates itssupply chain effectively. We forecast NIPRO will likely register no lessthan US$10mn and US$15mn in net profit for 2016 and 2017 and boostprofits of the Company remarkably in 2016 when the acquisition of itsentire stake will be completed. Risks: Disappointing rise in penetration rate of glucose monitoring devices and launch of newtechnologies for glucose monitoring. Reiterate BUY rating. In 2015, the Companyˇs profit growth slowed down considerably due to M&Asand increased input into hospital assets. In 2016, its profit growth will likely soar as the one-off factorsdisappear and results of acquired overseas assets will be consolidated into its statements. Excludinginfluence of consolidating overseas assets (as it remains uncertain when the Company will acquire theremaining stake of the target company), we cut the Companyˇs 2016-18E EPS forecasts to0.65/0.81/1.04 (diluted 2015 EPS at Rmb0.42 and original 2016/2017E EPS forecasts at Rmb0.97/1.31).We expect overseas M&As to accelerate the Company tapping overseas markets and high-end glucosemeter market in China. Given its advantages in glucose monitoring resources that it has integratedvertically and deployment in mobile health care, we set the Companyˇs TP at Rmb30.78 and reiterate ourBUY rating.
