Kyushutsu (600998) 2019 Third Quarterly Report Review: 19Q3 Results Meet Expectations Non-Net Profits Maintain Rapid Growth

Company dynamics The company released the third quarter report of 2019.

Matter Comments The overall performance of the first three quarters of 19 was in line with expectations. The company achieved operating income of 733 in the first half of 2019.

7.9 billion, an annual growth of 15.

11%; realized net profit of return to mother 10.

1.9 billion, an annual increase of 32.

05%; realized deduction of non-net profit 8.

6.2 billion, an annual increase of 26.

14%.

By quarter, the company achieved operating income of 249 in the third quarter of 2019.

500,000 yuan, an annual increase of 17.

15%; achieve net profit attributable to mother 2.

7.5 billion, an increase of 17 per year.

37%; net profit deducted from non-attributed mothers2.

4.5 billion, an annual increase of 26.

72%, the overall performance was in line with expectations, and the net profit after deducting non-attribution to mothers continued to grow rapidly in 19Q3.

The company announced in August 19 that it plans to repurchase part of the company’s shares through centralized bidding transactions. The size of the repurchased funds does not exceed RMB 600 million. The repurchased shares will be used for company mergers and core backbones to implement distribution incentive plans.The company’s confidence in future development prospects.

As of the end of September, the company gradually repurchased 3,976.

870,000 shares, the paid amount is 5.

5 billion yuan.

The increase in net sales margin improved the company’s gross profit margin for the first three quarters of 2019 to 8.

22%, 0 per year.

07 averages; net sales margin is 1.

40%, a year to raise 0.

18 averages.

Company expenses during the first three quarters of 20196.

38%, an increase of 0 every year.

03 budgets, including financial cost budget1.

27%, an increase of 0 every year.

31 shareholders, considering that the company’s submission of the “approval of the company’s non-public issuance of preferred shares” has been reviewed by the Securities and Futures Commission in October 2019, and the company’s fourth quarterly meeting is held to clear the accounts receivable.Will initially stabilize.

The company’s net cash flow from operating activities in the first three quarters of 2019 was -27.

1.1 billion yuan, -42 from the same period 杭州桑拿网 last year.

The significant improvement of USD 2.6 billion was mainly due to the company’s effective control of hospital sales during the accounting period, increased efforts to clear accounts receivable, and increased returns.

From the perspective of the discrete business of the wholesale business, which continues to grow rapidly: 1) Pharmaceutical wholesale and related businesses achieved revenue of 707 in the first three quarters of 19 years.

38 trillion, an annual increase of 15.

75%, continuing the rapid revenue growth in the first half of the year; 2) Pharmaceutical retail business achieved revenue in the first three quarters of 1913.

5.7 billion, down 6 every year.

41%, which is mainly due to factors such as the adjustment of the business strategy of the good pharmacist’s online business and the continuous promotion of business transformation; 3) The pharmaceutical industry business achieved revenue in the first three quarters of 1911.

US $ 0.5 billion, an annual increase of 4.80%.

In general, the company’s main business basically continued the half-year growth rate in the first half of the year. The core business of pharmaceutical wholesale and related businesses has gradually digested the interaction of the full implementation of the “two-vote system”.Quickly picking up, the elderly improve the company’s overall operating quality.

The revenue of the Chinese and Western patented medicine business grew steadily, and the device business continued to grow at a high speed. Views: 1) The Chinese and Western patented medicine business achieved revenue of 568 in the first three quarters of 19

9.4 billion, an annual increase of 12.

87%; 2) Chinese herbal medicines and Chinese medicine decoction pieces business realized revenue 25 in the first three quarters of 19 years.

6.2 billion, an annual increase of 5.

79%; 3) The medical device and family planning business achieved revenue 113 in the first three quarters of 19 years.

310,000 yuan, an annual increase of 44.

40%; 4) Consumer goods business achieved revenue in the first three quarters of 1924.

1.2 billion, a decrease of 17 per year.

93%.

In general, the company’s core business has achieved steady growth in the revenue of Chinese and Western medicines, and high-margin medical equipment and family planning supplies have maintained rapid revenue growth, driving the company’s profit side to increase and increase.

Risk reminder: two-vote system, pharmaceutical bidding, price reduction, and other industry policy risks; medical institutions’ sales are less than expected risks; accounts receivable account terms are extended; risk investment recommendations are maintained for the next six months; maintaining a “cautious increase” rating;Stock returns to 0.

88, 1.

06 yuan, with a closing price of 14 on October 21.

15 yuan calculation, dynamic PE is 16 respectively.

15 times and 13.

38 times.

We believe that, as a national pharmaceutical business leader, it has competitive advantages such as wide marketing network coverage and complete supporting pharmaceutical logistics centers. It continuously enjoys policy dividends under the policy background of “two-vote system” and tiered diagnosis and treatment, while expanding new customersThe growth of strengthened customers provides a driving force for the company’s continued growth.

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