Yunnan Baiyao (000538) 2018 Annual Report Comment: The rebound in the second half of the year is clearly absorbing and is about to be completed

Events: (1) The company announced its 2018 annual report: realized revenue of 26.7 billion (+9).

84%); net profit attributable to mother 33.

07 billion (+5.

14%); net profit after deduction is 29.

18 billion (+4.

91%); net cash flow from operating activities26.

300 million (+127.

55%); EPS 3.

18 yuan; 20 yuan (including tax) is proposed for every 10 shares.

Performance is in line with our democratic expectations.

(2) At the same time, announced the 2018 audited financial report of Baiyao Holdings (absorbed and merged listed entity): realized operating income of 270.

1.7 billion (+10.

27%); net profit 34.

80,000 yuan (+21.

67%), a 5% increase in proportion to the net profit of the currently listed entities.

Opinion: The performance is in line with expectations, and the drug rebounded significantly in the second half of the year. The second half was significantly better than the first half: the company’s Q4 single-quarter revenue was 69.

850,000 yuan, an increase of 10 in ten years.


H2 revenue increased 11% compared to H1 8.

The 5% growth rate has improved.

Q4 deducts non-returned net profit4.

800 million US dollars, due to the number of bases, an annual growth of 37%.

H2 profit increased by 10%, compared with H1’s profit decline of 1.

2%, with significant improvement.

In terms of sectors, the pharmaceutical sector realized revenue of 45 in the case of OTC destocking in 18 years.

3.1 billion, with a growth rate of only 3%; H1 grew by -2% and H2 increased by 6%. Channel inventory is expected to decrease in the second half of the year, and central products will gradually return to positive growth.

According to the profit composition of the company’s various business segments, the net profit of our wholesale pharmaceutical segment is about 9.

600 million, an annual increase of about 10%.

The health product segment has annual revenues of US $ 4.5 billion, an increase of 4 per year.

6%; estimated net profit of 15.

$ 700 million (plus one month of net profit for e-commerce companies), an increase of about 4 per year.


The market share of the core product Baiyao toothpaste ranks second in the country, and the national brand ranks first. The new category of probiotic toothpaste has a good growth rate.

However, due to the impact of 杭州桑拿网 the “tranexamic acid incident” last October, revenue in the fourth quarter shifted slightly. Therefore, Baiyao toothpaste revenue is expected to be about 4 billion, which is basically flat.

After the adjustment of the business division in early 18, the new products achieved good growth. Among them, it is expected that Yangyuanqing shampoo and Qingyitang hygiene will reach an average growth of more than 30%, and each of them will achieve 200 million sales.Advanced technology platform cooperation and other forms of growth have achieved nearly 100 million US dollars each year.

The Chinese Medicine Resources Division initially achieved revenue13.

670,000 yuan, expected to achieve net profit3.

400 million, an average annual increase of 20%.In 18H1, due to the price fluctuation of Sanqi, which affected the transaction volume, resulting in a decrease in profit. After the price of H2 stabilized, the transaction volume picked up and realized further growth.

The explosive product “Leopard Seven” Sanqi powder to C is expected to achieve about 100 million in 18 years, and other health products are still in the exploration stage.

As the commercial leader of Yunnan Province, the pharmaceutical business sector has maintained steady growth for 18 years, achieving revenues of US $ 16.3 billion, an increase of more than 12%.

77%; Net profit 4.

350,000 yuan, an annual increase of 8%.

After the institutional mechanism is rationalized, it is expected to resume sailing.

From the second half of 2016 to the present, the company has gradually taken the road of mixed ownership reform and continuously pushed forward.

The current listing of Baiyao Holdings is expected to be nearing completion.

The “last loop” share repurchase implementation of Baiyao mixed reforms is about to come to an end, and the company is expected to have new vitality.

At the same time, the company’s fundamentals have undergone positive changes at the same time. It is expected that the company’s major business segments will achieve restorative growth.

H2 performance in 18 years has improved, and it is expected that there will be substantial improvement in 19 years.

Health Products Division: The organizational reorganization has achieved results, and new products are promising.

Since the beginning of 2018, the Health Products Division has reorganized its organizational structure to form three BUs for oral cavity, skin care, and skin beauty. Each product has changed from co-line sales to sub-line sales. It will achieve better development in 19 years.

In the future, we will continue to introduce new categories to meet market demand, continue to consolidate and increase market share, and seek new opportunities in the fields of export and e-commerce.

Pharmaceuticals Division: The end of the destocking cycle, the volume and price went up again.

Beginning in 2016, the company’s Baiyao drugs entered the destocking cycle, but in the past three years, the core products still maintained relatively stable growth.

As of the end of 18 years, we have estimated that the OTC channel inventory of central products is about 3 months, which has returned to a reasonable level, indicating that the current cycle of destocking is nearing its end.

Starting in 19 years, it will be “launched lightly,” achieving rapid growth in the OTC channel.

With regard to generic medicines, small businesses withdraw from the market under a consistent evaluation and focus on tapping the potential of specialty products. The contribution of generic medicines to the company’s profits will be more obvious.

Chinese Medicine Resources Division: Stable price of March 7 will resume high growth.

The current revenue of the Chinese Medicine Resources Division is mainly the operation of medicinal materials. The price of 37 is expected to be stable in 1919.

In the future, the Traditional Chinese Medicine Resources Division will focus on product C, and will adopt a new retail model led by “Baiyao Life + Experience Store” to integrate online and offline to cultivate new health products.

The long-term strategy is ambitious, and the mixed reform will accelerate the promotion, and the future has a bright future.

In the medium to long term, the company will continue to explore potential research value and market space in the fields of general health and medical rehabilitation, and focus on the development of innovative drugs / biological drugs.

Strategically focusing on orthopedic and gynecological products, combined with its own advantages (such as more than 1,000 hospital-side sales teams) and market prospects, the company will focus on the orthopedic field.

The company is scheduled to increase its cash assets of 200 trillion yuan, which is expected to achieve capital advantages. Through the license-in strategy, it will quickly replenish the product line in the pharmaceutical field and realize the company’s strategic layout in the field of innovative drugs.

In the future, new business modules including: women’s health pharmaceutical products, medical devices, health foods, tea specialty products, modern medical services and rehabilitation services will be established to leverage the company’s four advantages in brand, channel, capital, and management capabilities to build excellentplatform.

In addition, the company also hopes to grasp the development potential of the medical industry and achieve breakthroughs in the field of medical services.

Earnings forecast and rating: For the time being, we will not consider the net profit after the injection of Baiyao Holding’s assets, the change in equity, and the financial income of 20 billion cash assets, and maintain the EPS of 3 for 19-20 years.


16 yuan plus 21 years of EPS 4.

8 yuan, an increase of 14% / 15% / 15% per year, respectively, the current corresponding PE of 19-21 years is 24X / 21X / 18X.

The company’s 18H2 operating conditions have improved, and the completion of this absorption and merger will help stimulate vitality and further boost performance.

The company’s long-term strategic goals are ambitious and it is committed to becoming a national team representative enterprise that competes with international industry giants.

After the mixed reforms will be accelerated, the future prospects are broad, and the rating of “Buy” is maintained.

Risk warning: the repurchase progress exceeds expectations; the new product promotion progress exceeds expectations.