XXXX中国医疗产业报告

May18,2011China:HealthcareEquityResearchFewnear-termcatalysts,butmedium-termlooksgood;ShinvauptoBuy,BeijingSLoffSellFewsignsofmeaningfulmarginrecoveryOnaverage,healthcaresectorFY2010earningscamein6.5%belowtheWindconsensus.ThesmallestdownsidesurpriseswereinTCMs,medicaldevices,anddistribution.Sectorpretaxprofitgrowthdeceleratedto22.3%yoyin1Q2011,whichwassmallerthanrevenuegrowthof27.7%yoyduetohigherinputcostsanddrugpricepressures.Wedonotseeprofitabilityrecoveringintheshort-termgiventhatinputpriceslookunlikelytofallthisyearandweseepricecutsonsomedrugs.Weseemedium-termgrowthforhealthcareWethinkthesector’soutperformancein2010somewhatexaggeratedrealgrowthpotential.Thevaluationpremiumvs.CSI300hasshrunkoverthepastsixmonthsbutremainshighat140%.Weseenonear-termcatalystslikelytodriveanoverallrebound,butseeincreasedgovernmentspendingthroughmedicalreformsleadingtostrongdrugsalesgrowth,lowercostpressures,andstrongerprofitgrowth.WemaintainapositiveoutlookonhealthcaresectorgrowthpotentialandmaintainourNeutralcoverageviewonbalance.Stockselection:LookforsustainablegrowthWelikeTCMsandmedicaldevicesgiven:(1)Rapidgrowth–weseesustainablerevenuegrowthforTCMsandincreasedindustryconsolidationinmedicaldevices(mostlistedcompaniesarefastgrowingindustryleaders),(2)Lesspricecutriskinbothsubsectors(apartfromdrugelutingstents).WefavorZhongheng,Shinva,E-Jiao,Sanjiu,HuahaiandYuyue.WeupgradeShinvatoBuyfromNeutralonfaster-than-expectednewbusinessgrowthandimprovedprofitability.WeremoveBJSLfromourSelllistonacceleratedsalesgrowthofBeikenengandtier-2products.WealsoremoveBaiyaofromourBuylistduetodeclininggrossmargintrend.WeaddHepalinktoSellasweseesubstantialearningsdeclineduetobothupstreamanddownstreampressures.WereviseourEV/GCIvs.CROCI/WACCbased12-monthTPsby-44%to+54%toreflectour2011E-13EEPSrevisions(-30%to+58%)andourchangedsectorVal-ratio.SectorrisksTightergovernmentcontroloverdrugprices;continuedinputcostinflation.GSCHINAHEALTHCARECOVERAGE*Thestockisonourregionalconvictionlist.PricedasofMay13,2011marketclose.Source:GaoHuaSecuritiesResearchestimates.FengqiQian+86(21)[e-mail]sCompanyLimitedTheGoldmanSachsGroup,Inc.doesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegACcertification,seetheendofthetext.OtherimportantdisclosuresfollowtheRegACcertification,orgoto(21)[e-mail]sCompanyLimitedTheGoldmanSachsGroup,Inc.GlobalInvestmentResearchCompanyTickerRating12-mTP(Rmb)PotentialUpside/DownsideEPS2011E(Rmb)Change(%)Zhongheng600252.SSBuy*50.730%1.840%Shinva600587.SSBuy41.021%0.8837%E-jiao000423.SZBuy55.420%1.520%Sanjiu000999.SZBuy24.919%1.03-5%Huahai600521.SSBuy16.215%0.454%Yuyue002223.SZBuy48.614%1.030%Lepu300003.SZNeutral24.413%0.680%KMPharm600422.SSNeutral13.810%0.420%Baiyao000538.SZNeutral63.86%1.70-3%Kehua002022.SZNeutral14.85%0.55-11%BeijingSL002038.SZNeutral38.54%1.0522%Hisun600267.SSNeutral37.52%0.9515%Hengrui600276.SSNeutral31.4-3%0.85-1%Tasly600535.SSNeutral38.5-5%1.186%Hepalink002399.SZSell29.0-18%0.96-27%NHU002001.SZSell23.4-22%1.6713%渐飞研究报告-:HealthcareGoldmanSachsGlobalInvestmentResearch2TableofcontentsLittleshort-termmarginupside;butpositivemediumterm;focusonvisibility3 Overviewofratings,targetpricesandearningsestimates6 Earningsshortfallsvs.consensus;littlemeaningfulrecoveryinprofitability9 Fewnear-termcatalysts,butweseerapidmedium-termgrowth;focusonTCMsandmedicaldevices13 Shinva(600587.SS,Buy):Unexpectedlystrongnewbusinessgrowth;uptoBuy14 BeijingSL(002038.SZ,Neutral):Backtofast-growthtrack;uptoNeutral17 YunnanBaiyao(000538.SZ,Neutral):Slowergrowthandfairvaluation,downtoNeutral21 Hepalink(002399.SZ,Sell):DowntoSellduetodeterioratingoperatingenvironment25  PricesinthebodyofthisreportareasofthemarketcloseofMay13,2011,unlessmentionedotherwise.TheauthorwouldliketothankLiYuandWentingShenfortheirinvaluablecontributiontothisreport.渐飞研究报告-:HealthcareGoldmanSachsGlobalInvestmentResearch3Littleshort-termmarginupside;butpositivemediumterm;focusonvisibilityHealthcarestockshavebeenconsistentlydecliningsincelastNovember,bringingtheaverage12-monthforwardP/Esectorpremiumvs.theCSI300downto140%from190%.Wethinkthisismainlydueto:(1)pricecutexpectations;(2)sector-wide2010earningsshortfallsvs.consensus;(3)historicallyhighvaluations.Thestocksarecurrentlytradingataroundtheaveragevaluationlevelforthepast12months,whichweconsidertobereasonable.Despitefewsignsofshort-termprofitabilityimprovements,wearestillpositiveonthemedium-termsectorgrowthoutlook.Weseelimitedroomfordownsidecorrectionatthispointandsuggestaccumulatingnamesthatweconsidertohaveasustainablegrowthoutlook.WefavorTCM