20171128-中国银河国际证券-三生制药-01530.HK-Shanghai_visit_takeaways__no_big_change_in_fundamentals._Maintain_HOLD.__6页_1mb
报告摘要
3SBio [1530.HK] Summary
Core Content and Investment View
3SBio's recent visit to its Shanghai production line and meeting with management indicated that there are no significant changes in its fundamental performance. The company's stock was maintained at a HOLD rating, with the analyst suggesting that the recent re-rating is more a reflection of strong market sentiment towards the healthcare sector rather than any material change in the company's fundamentals.
The core segments of the company—Yisaipu, TPIAO, and the resubmission of Trastuzumab—are largely on track. However, guidance for TPIAO and EPIAO+SEPO in 2018E fell short of expectations, leading to a slight downward adjustment in the earnings forecast for 2018E. The target price was raised from HK$9.6 to HK$14.73, reflecting a valuation multiple of 27x 2018E PER, which is in line with the expected 27% EPS CAGR for 2016-2019E and close to the historical average of ~29x.
Key Business Segments
Yisaipu
- Used for rheumatoid arthritis (RA)
- Revenue in 1H17 declined by 1.5% to RMB440m due to sales team restructuring, but this was completed by Q2 2017
- Management reiterated a full-year growth target of 8-10% for 2017, with 20-25% growth expected for 2018E
- Expected to contribute to mid single-digit topline growth in 2017E and 20% in 2018E
TPIAO
- Continued strong growth in 1H2017, reaching RMB493m (21.5% YoY)
- Management guided 20-25% growth in 2018E, below the previously expected 30% due to factors including increased sales to lower-tier hospitals and execution of NRDL
- Projected revenue of ~RMB1.17bn (25% YoY) for 2018E
EPIAO+SEPO
- Guidance for 2018E revenue growth was 5%, below the expected 9%
- Adjusted projections due to potential ASP cuts of 5-10% for EPIAO+SEPO in 2018E
- Expected revenue growth of 5% instead of 9% for 2018E
Diabetes Segment
- Includes Humulin and potentially Bydureon
- Strategy is to expand sales team to capture incremental market share rather than compete with MNCs
- Humulin is expected to grow at ~10% CAGR through channel expansion
- Overall, the Diabetes segment is projected to contribute 21.6% of revenue in 2018E
Trastuzumab Resubmission
- Targeted for re-submission to CFDA in Q1 2018, delayed from Q4 2017
- Used for HER2 over-expressed breast cancer, a dangerous type of breast cancer
- Anti-HER2 + chemotherapy is a top recommendation by the American Society of Clinical Oncology, making the resubmission a potential short-term catalyst
Financial Highlights
| Metric | 2015A | 2016A | 2017E | 2018E | 2019E |
|---|---|---|---|---|---|
| Turnover (RMB m) | 1,673 | 2,797 | 3,837 | 5,460 | 6,279 |
| Net profit (RMB m) | 526 | 713 | 877 | 1,170 | 1,455 |
| Net margin (%) | 31.5 | 25.5 | 22.9 | 21.4 | 23.2 |
| EPS (RMB) | 0.233 | 0.282 | 0.346 | 0.462 | 0.574 |
| Core EPS (RMB) | 0.249 | 0.280 | 0.346 | 0.462 | 0.574 |
| EBITDA (RMB m) | 519 | 1,054 | 1,428 | 1,751 | 2,042 |
| PER (x) | 57.2 | 47.3 | 38.6 | 28.9 | 23.2 |
| PBR (x) | 5.3 | 5.0 | 4.4 | 3.8 | 3.3 |
| ROE (%) | 17.1 | 11.6 | 12.6 | 14.7 | 15.6 |
Balance Sheet and Cash Flow
| Item | 2015A | 2016A | 2017E | 2018E | 2019E |
|---|---|---|---|---|---|
| Cash & cash equivalents (RMB m) | 1,900 | 1,040 | 4,891 | 4,709 | 5,459 |
| Inventories (RMB m) | 134 | 262 | 465 | 754 | 604 |
| Trade & note receivables (RMB m) | 550 | 786 | 1,074 | 1,529 | 1,758 |
| Current assets (RMB m) | 2,763 | 2,241 | 6,583 | 7,145 | 7,974 |
| Non-current assets (RMB m) | 3,867 | 8,798 | 9,015 | 8,883 | 8,745 |
| Total assets (RMB m) | 6,630 | 11,039 | 15,597 | 16,028 | 16,718 |
| Operating cash flow (RMB m) | 455 | 1,004 | 909 | 945 | 1,622 |
| Net change in cash (RMB m) | 1,075 | -667 | 3,851 | -182 | 750 |
Key Ratios
| Ratio | 2015A | 2016A | 2017E | 2018E | 2019E |
|---|---|---|---|---|---|
| Sales Growth (%) | 48.0 | 67.2 | 37.2 | 42.3 | 15.0 |
| Operating Profit Growth (%) | 23.6 | 102.3 | 31.4 | 26.9 | 24.4 |
| EBITDA Growth (%) | 32.8 | 103.2 | 35.5 | 22.7 | 16.6 |
| Core Net Profit Growth (%) | 93.4 | 25.9 | 24.2 | 33.4 | 24.4 |
| Gross Margin (%) | 85.5 | 85.6 | 80.9 | 77.5 | 78.6 |
| Operating Margin (%) | 26.4 | 31.9 | 30.6 | 27.2 | 28.2 |
| EBITDA Margin (%) | 31.0 | 37.7 | 37.2 | 32.1 | 32.5 |
| Core Net Profit Margin (%) | 33.5 | 25.2 | 22.9 | 21.4 | 23.2 |
| ROE (%) | 17.1 | 11.6 | 12.6 | 14.7 | 15.6 |
| Total Debt to Equity (%) | 7 | 47 | 89 | 67 | 50 |
Market and Shareholding
- Close price (Nov 27, 2017): HK$15.00
- Target Price: HK$14.73 (-1.8%)
- Market Cap: US$4,881.2m
- Shares Outstanding: 2,532.3m
- Free Float: ~41.9%
- Southbound Investors' Stake: ~16% (up from ~13% in August)
- Major Shareholder: CS Sunshine Investment (28.3%)
Peer Comparison
| Company | Ticker | Price (Loc) | Market Cap (US$m) | PER (x) | PBR (x) | ROE (%) | EV/EBITDA (x) |
|---|---|---|---|---|---|---|---|
| 3S BIO INC | 1530 | 15.00 | 4,881 | 47.3 | 5.0 | 11.6 | 22.7 |
| Essex Bio-tech | 1061 | 4.84 | 349 | 21.0 | 5.1 | 26.9 | n.a |
| Genscript Biotech | 1548 | 8.97 | 1,989 | 71.9 | 10.9 | 15.0 | n.a |
| Shanghai Raas -A | 002252 | 19.72 | 14,870 | 61.6 | n.a | n.a | 82.6 |
| Hualan Biologics -A | 002007 | 29.85 | 4,212 | 35.7 | 6.0 | 18.9 | 28.0 |
| Simple Average | - | - | - | 93.5 | 8.3 | 14.6 | 32.8 |
| Median | - | - | - | 54.8 | 6.6 | 14.1 | 30.0 |
Analysts and Disclaimer
- Analyst: Harry He and Wong Chi Man, CFA
- Disclaimer: The report is not intended for distribution in jurisdictions where it would be illegal. It is based on reliable information but not guaranteed for accuracy. No liability is accepted for any inaccuracies or omissions.
Copyright
- Copyright: Reserved by China Galaxy International Securities (Hong Kong) Co., Limited
- CE No. AXM459
- Address: 20/F, Wing On Centre, 111 Connaught Road Central, Sheung Wan, Hong Kong
- General Line: 3698-6888
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