德银中国医疗保健行业血浆名称的模型修正2017121910页

19December2017Pharmaceuticals/BiotechnologyChinaHealthcareHealthCarePharmaceuticals/BiotechnologyForecastChangeAsiaChinaIndustryChinaHealthcareDate19December2017DeutscheBankMarketsResearchModelrevisionforplasmanamesReimbursementcontrolmayaddrisktovolumegrowthAsweapproachyearend,morenewsflowsemergedonreimbursementbudgetcontrolwhichislargelyinlinewithourpreviousexpectation.Thatbeingsaid,weareslightlysurprisedthatIVIGproducts,inadditiontoalbumin,havebeenplacedunderMDL(monitoreddruglist).WebelievePDTindustrycouldbeatslightlylargerexposurevs.exclusivedrugsonvolumegrowth.WereduceourestimatesforCBPOandHualanaccordingly.ModelrevisionforCBPOWereviseddownourestimatesforCBPOfrom4Q17to2020.Wemodel7%/7%growthforrevenue/coreprofitin4Q17inRMBterms,representingchangeof-2%/-1%respectivelyvs.previousestimates.For2018,weadjustrevenue/coreprofitgrowthto14%/15%,representingvarianceof-1%/-1%frompriorestimates.TherevisionwasmainlydrivenbyloweringalbuminandIVIGsales,whichweprojecttogrowatCAGRof4%/4%,respectively,from2018to2020.ModelrevisionforHualanWereviseddownourestimatesforHualanfrom4Q17to2020.Wemodel13%/-2%growthforrevenue/coreprofitin4Q17,representingchangeof-3%/-1%respectivelyfrompreviousforecast.For2018,weadjustrevenue/coreprofitgrowthto13%/14%,representingvarianceof-2/-5%frompriorestimates.TherevisionwasdrivenbyloweringalbuminandIVIGsales,whichweprojecttogrowatCAGRof7%/11%,respectively,from2018to2020.ValuationandrisksWelowerourPTforCBPOtoUSD116fromUSD130,basedon21x2018EforwardEPS.Webelievethemultipleisjustified,asthecompany’sglobalpeersaretradingat27x,with14%EPSgrowthin2019Evs.12%forCBPOinRMB.KeyrisksincludeM&Aintegration,priceerosion,disruptioninplasmacollection,costinflationanddelaysinproductlaunches.WelowerourPTforHualantoRMB24.7fromRMB26.0,basedon28x2018EEPS.Webelieve28xisjustified,asA-sharepeersaretradingat29xwith27%growthin2018E(vs.14%wemodelforHualan).Upsiderisk:smaller-than-expectedASPcuts;downsiderisks:costinflation/higher-than-expectedASPcuts.JackHu,Ph.D.ResearchAnalyst+852-22036208MeganXuResearchAssociate+852-22035928KeyChangesCompanyTargetPriceRatingCBPO.OQ130.00to116.00-002007.SZ26.00to24.70-Source:DeutscheBankToppicksChinaBiologicProducts(CBPO.OQ),USD76.08BuySource:DeutscheBankCompaniesfeaturedChinaBiologicProducts(CBPO.OQ),USD76.08Buy2016A2017E2018EP/E(x)25.814.813.7EV/EBITDA(x)19.212.010.3Price/book(x)6.253.623.05HualanBiologicalEngineeri(002007.SZ),CNY28.28Hold2016A2017E2018EP/E(x)44.036.831.6EV/EBITDA(x)31.026.222.8Price/book(x)7.885.665.05Source:DeutscheBankDeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.Distributedon:19/12/201708:12:07GMT7T2se3r0Ot6kwoPa19December2017Pharmaceuticals/BiotechnologyChinaHealthcareModelupdated:13December2017RunningthenumbersAsiaChinaPharmaceuticals/BiotechnologyHualanBiologicalEngineeriReuters:002007.SZBloomberg:002007CHHoldPrice(13Dec17)CNY 28.28TargetPriceCNY 24.7052WeekrangeCNY 27.21 - 37.30Marketcap(m)CNYm 26,303 USDm 3,972.1CompanyProfileEstablishedin1992,HualanBiologicalengagesinthemanufactureofplasmaderivedtherapeuticsandvaccines.ThecompanyalsohasstrongR&Dcapabilitieswithmultipleproductsunderdevelopmentincludingvaccinesandmonoclonalantibodies.PricePerformanceHualanBiologicalEngineeriShenzhenIndex(Rebased)Jan'16Jan'17Jul'16Jul'172030401050MarginTrendsEBITDAMarginEBITMargin14151617E18E19E4045503555Growth&ProfitibilitySalesgrowth(LHS)ROE(RHS)14151617E18E19E0102030401617181920SolvencyNetdebt/equity(LHS)Netinterestcover(RHS)14151617E18E19E-30-20-100JackHu,[e-mail] 31-Dec2014201520162017E2018E2019EFinancialSummaryDBEPS(CNY)0.480.540.730.770.890.99ReportedEPS(CNY)0.580.630.840.861.001.10DPS(CNY)0.380.250.400.390.440.00BVPS(CNY)3.73.94.55.05.66.3Weightedaverageshares(m)929930930930930930Averagemarketcap(CNYm)16,27625,20629,87426,30326,30326,303Enterprisevalue(CNYm)15,80025,04029,58626,07625,56424,864ValuationMetricsP/E(DB)(x)36.449.744.036.831.628.5P/E(Reported)(x)30.242.838.332.928.425.7P/BV(x)5.596.947.885.665.054.51FCFYield(%)2.21.30.41.23.34.2DividendYield(%)2.10.91.21.41.60.0EV/Sales(x)12.717.015.311.510.08.7EV/EBITDA(x)24.533.431.026.222.820.1EV/EBIT(x)29.841.436.529.825.722.5IncomeStatement(CNYm)Salesrevenue1,2431,4721,9352,2652,5582,862Grossprofit7698531,1711,3951,5781,765EBITDA6447499559971,1231,239Depreciation105137137112117124Amortisation877999EBIT5316058118769971,105Netinterestincome(expense)204716191837Associates/affiliates000000Exceptionals/extraordinaries000000Otherpre-taxincome/(expense)774077417965Profitbeforetax6286939049361,0931,207Incometaxexpense89111133146175193Minorities0-7-9-9-9-9Otherpost-taxincome/(expense)000000Netprofit5385897807999271,023DBadjustments(includingdilution)-91-82-101-85-95-100DBNetprofit447507679714