Zhaoyan New Drugs (603127) 2019 Third Quarterly Report Review: Q3 Net Profit Growth Sudden Change Has Been High and Still Expected

Zhaoyan New Drugs (603127) 2019 Third Quarterly Report Review: Q3 Net Profit Growth Sudden Change Has Been High and Still Expected

The company’s third quarter performance in 2019 was lower than expected, and the growth rate of the profit side was significantly lower than that of the income side.

Inventories have grown significantly. If the backlog is confirmed in Q4, it is expected to provide support for expected results.

In addition, the company’s acquisition of Biomere has accelerated its internationalization, and overseas revenue is expected to become a new profit growth point.

The company’s Q3 profit growth is expected to exceed market expectations.

In Q1-Q3, the company’s revenue in 2019, attributable to mothers and deducting non-net profit were 3 respectively.

4.8 billion, 7468.

310,000, 6036.

110,000 yuan, +42 a year.

95%, +33.

66%, +38.


In the third quarter alone, operating income, net profit attributable to mothers and net profit attributable to non-mothers or +35.

86%, +4.

5%, +10


In the reporting quarter, the company’s revenue continued to grow at a high speed, but its profit growth rate improved, and the net profit margin in Q3 fell by a single quarter.

5%, we think the expectation is: ① high net profit in Q3 2018; ② labor costs and business volume increase in 19Q3 lead to cost and expense increase; ③ change in order structure: non-GLP projects (business with low gross profit margin) were recognized earlier in 19Q3many.

Inventories have grown significantly, and fourth-quarter results are worth looking forward to.

The number of inventories in this period increased by 1 from the beginning of the period.

04 ppm to 2.

190,000 yuan (change +90.

75%), the number of tied questions increased.

We judge that the company’s main task at this stage is to digest orders. The backlog of orders in Q3 is expected to be confirmed in Q4, and it is still possible to achieve sustained high growth.

Internationalization is accelerating, and the acquisition of Biomere actively expands overseas markets.

The company announced in May this year that it intends to acquire 100% equity of 苏州桑拿网 BIOMERE with its own funds of approximately 27.28 million US dollars, and has now completed registration.

We believe that this acquisition is an important step for the company to go international. The significance is: ① change BIOMERE’s mature management model and high-quality customer resources to expand the company’s layout in the United States market; ② give full play to synergies and integrate with BIOMERE’s business teamExpand brand influence.

We expect that the gradual diversification of M & A will continue in the future, the company’s internationalization process will gradually accelerate, and overseas regions are expected to become new points of profit growth.

The expense ratio during the period was stable, and operating cash flow was significantly reduced.

In the single quarter of 2019Q3, the company’s financial, sales, and management expense ratios were -0.

82%, 2.

07%, 16.

34%, ten years +0.

48, +0.

76, -0.


Benefiting from the construction of GLP laboratories, the gradual completion of animal room facility integration and drug evaluation technology platforms, business synergies have led to a continuous decline in management expense rates, while the remaining expense rates remain stable.

In terms of cash flow, the net cash flow from operating activities in Q1-Q3 2019 was 97.26 million, -20 per year.

11%, the increase in the first three quarters of the payment of staff salaries and purchases of goods and receiving labor services (+71 per year).
28%, +61.

Risk factors: The progress of fund-raising projects is less than expected, the profit of new investment projects is not up to expectations, and industry policy risks.

Investment suggestion: Taking into account the growth of profit growth in the third quarter and the increase in inventory, we cut the company’s net profit forecast for the mother to 2019-2021 to 1.

4.7 billion / 2.

03 billion / 2.

72 trillion (previous forecast 1).

5.2 billion / 2.

07 billion / 2.

810,000 yuan), corresponding to the latest EPS EPS forecast of 0.



68 yuan (was 0.



74 yuan), corresponding PE is 68X, 49X, 37X, maintaining the “overweight” level.