內(nèi)容教程分析16jan

1、A S I A / P A C I F I CAsia Limited+Bin LiBin Liappre tes your supporthe Institutional Investor 2014 All-Asia Researchand SaleSurvey.Request your ballot.Isabella ZhaoIsabella ZhaoFor more informatio view allparticipantsYolanda HuYolanda.HucomStock RatingOverweightNortheast China PharmacyConsolidator

2、 UndervaluedIndustry ViewAttractiveWe rate Jian Overweight wipriceof xpectHK$3.90, implying nearly 50% upside.tottom-line CAGRs of over 30% in 2013-15, nks to the companys expanding network,proven acquisition capability, high gross marginproducts and direct supply m.Leading regional player, continui

3、ng to expand: In Northeast China, Jian operates the largest retail drugchainerms of the number of directly operateds, and id the greatest sales value of anyprivay owned pharmaceutical distributor in 2012. CAGRs in 2010-2012 were 65% for sales and 36% for net profit, and its OPM was 13% in 2012.Innov

4、ative value-chain-egrated business m producing high margins: Unlike industry peers who,falower grownd declining profitability, Jian hasgrown vigorously and raised margins, which we attribute to: 1) large sales from products with high gross margins (50-60% for retail, 30-40% for distribution); 2) a d

5、irectsupply miminates or reduermediariesto increase efficiency and profitability; 3) lower costoperations wifocus on tier 3 and 4 cities.Sound growth strategy: It aims to 1) expand high-GM product offerings, 2) increase sales via its direct supplymand 3) penetrate the lower tier cities market,boosti

6、ng further its top and bottom lines and margins.Compelling valuation: Our DCF valuation is HK$3.90,15x our 2014 diluted EPS estimate of Rmb0.21. The stock is trading at HK$2.65, at 10.0 x our 2014 EPS estimate, at about a 40% discount to its peer group average of 17x. We think such a discount is not

7、 justified.does and seeks to do business withcompanies coveredan Stanley Research. Asa result, investors should be awaret the firm maye aoferestt could affect theobjectivity ofResearch. InvestorsNear-term Catalysts: 1) earning results; 2) fasternshould considerResearch as only aexpected retailacquis

8、itions.single factoraking their investment deci.Foryst certification and other importantKey concerns: 1)ernment policy controls, 2) slowerdisclosures, refer to the Disclosure Section,anic grownd uncertaies in acquisitions;located atof this report.+=ysts employed by -U.S. affiliates are not registere

9、d with FINRA, may not beasso teds of the member and may not be subject to NASD/NYSE restrictions oncommunications wi subject company, public appearan and trading securities held by aresearchyst account.HAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital Managementhaidje.rustaupiKey Ratios and Sist

10、icsReuters: 2211.HK Bloomberg: 2211 HKChina Healthcare /PriceHK$3.90Up/downside to price(%)47Shr price, close (Jan 14, 2014)HK$2.6552-k RangeHK$2.92-1.99Sh out, dil, curr (mn)2,000Mkt cap, curr (mn)HK$5,300EV, curr (mn)HK$4,812Avg daily trading value (mn)HK$3.9Fiscal Year ending12/12 12/13e 12/14e 1

11、2/15eMWare EPS (HK$)#70.34Revenue, net (HK$ mn)2,8944,1305,5326,999EBITDA (HK$ mn)3936487921,019MWare net inc (HK$ mn)270416532680P/E-11.710.07.8P/BV-RNOA (%)(68.9)206.651.973.0ROE (%)60.059.117.919.4EV/EBITDA-Div yld (%)-2.30.01.9FCF yld ratio (%)-(7.7)12.29.0Leverage (EOP) (%)(83.1)(69.2)(77.1)(75

12、.4)Unless otherwise noted, all metrics are based onMWare framework (please see explanation later his note).# = Our penaccounting has changedWare, which will affect MWare EPS figures for some stocks under coverage. Visitcom/mw pdf forse =Research estimatesContentsContents2Jian Pharma Group: Finanl Su

13、mmary3Risk-Reward Snapshot: Jian Pharma (2211.HK, HK$2.65, OW, PT HK$3.90)4Company Snapshot5Investment Case6Investmentitives7Business Concerns12Finanlysis15Valuation22Scenario CompanyCompetitiveysis26ysis27ysis38China Pharmaceutical Distribution Industry Overview41China Drug Retail Industry Overview

14、452haidje.rustaupiHAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital ManagementJian Pharma Group: Finanl SummaryRmb million; Years Ending Decembere S ement Year Ended 31st Dec2011A2012A 2013E 2014E 2015ECash Flow S ement Year Ended 31st Dec2011A 2012A 2013E 2014E 2015ENet Sales COGSGross Pro it S

15、G&AOther expensesEBIT1,474(1,096)2,326(1,781)3,224(2,353)4,311(3,121)5,454(3,866)Cash Flow From Operating EBITDepre tion24932(76)(56)31695(87)(81)4642220(647)(108)5633619100(130)715611834(184)378(103)(30)546(189)(55)871(334)(73)1,190(554)(73)1,588(780)(93)Amortisation ofChg in WCangible assets245630

16、2(10)464656377154Cash flow from other op. activitiesCF from OperationsNet NO PBTTaxes MinorityNet Profite122162(248)587644251(62)9292(79)14470(117)28569(142)12720(180)10Cash Flow from Investing Capital ExpendituresAcquisition of entities and businesserest(12)(153)- (14)(15)(174)(4)(131)(50)(122)-4(8

17、8)(1,210)-5(275)(910)-21800.091990.103250.164150.215300 26Diluted EPS (Rmb)Purchase ofangible assetOther Investing Cash FlowCF from Investing(179)(323)(168)(1,294)(1,183)BalanheetYear Ended 31st Dec2011A2012A2013E2014E2015ECash Flow from FinancingDeemed distribution to Shareholder Loan from a shareh

18、olderRepayment of loan from a shareholder Dividends paidOther Financing Cash Flow(1)673-(8)(5)- 656(86)867- (79)-Trade and other receivables InventoriesCashOther Current Assets Current assets2101787132742494563352821,476448375770567464152- (41)-(50)-11,1011,0992,2131,7121,302CF from Financing664(96)

19、1,437-(79)PPEangible assets Investments in JV19913514473554927733559124131316891,3343472991092,244Other Cash Flow - Including FXChange in Cash(0)606(0)(257)01,0200(706)0(618)Deferrede tax assetsRatioysisOther LT assets-current assetsYear Ended 31st Dec2011A2012A2013E2014E2015E1324175511,7982,909Grow

20、th Sales EBITDAOperating ProfitTrade and oth ayables801268278323086227942321585566418275588171.7%52.3%52.2%49.5% NA57.8%25 5%23 3%10.8%10.8%38.6%56.4%53.7%62.7%62.7%33.7%23.1%21.2%27.8%27.8%26.5%29.7%27.1%27.7%27.7%Currente tax liabilitiesTotal Current LiabilitiesNeteDeferredTotalecurrent liabilitie

21、s525252525Diluted EPS525252525MarginsEBITDAGross Margin EBIT16.8%25.7%16.6%12.8%13.4%23 5%13.0%9 2%15.1%27.0%14.4%10.9%13.9%27.6%13.1%9.9%14.2%29.1%13.1%9.9%ReservesCapital reserves40191293233921(9)209528796776472097671076776472091,1811196776472091,632130Sutory reservesNeteShare-based compensation r

22、eservesRetained earningsReturns-controllingShareholders Eqerests4016282,4182,8443,305ROEROA RNOA66.0%67.0%229.3%60.0%17.6%(68 9%)59.1%21.4%206.6%17.9%15.0%51.9%19.4%15.1%73.0%Total liabilities and shareholders equity1,2331,5152,7643,5104,211E =Research estimates Source: Company data,Research3haidje.

23、rustaupiHAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital ManagementRisk-Reward Snapshot: Jian Pharma (2211.HK, HK$2.65, OW, PT HK$3.90)Risk-Reward View: Northeast China Pharmacy Consolidator with High Growth/MarginsWhy Overweight?A leading pharmaceutical distributor and retail pharmacy operator

24、 in Northeast Chinaxpect higher growth rate and margin performance to be sustained, due to its high gross margin products,direct supply m operation cost.and lowerProven acquisition and capabilityIt is currently trading at 10.0 x 2014E EPS, a 40% discount to its national distributors/retail drugchain

25、 peersKey Value DriversegrationPrice(Jan-15)Historical Stock PerformanceCurrent Stock PriceSource: Thomson Reuters,ResearchNew and profitables additionsthroughRetailanic growth or acquisition s expanGross margin upside as the company launches more high-GM productsSSS growth driven by customer loyalt

26、y, branding, convenience level and trafficPotential CatalystsAnnouncement oft favors retail drugEncouraging earnings resultsAnnouncement of acquisition activity, in line with the companys s ed strategy.Key Risksernment policyBear to Bull: Drugaddition and margin expanare key driversNetwork expan exp

27、ected.Unexpected margin ero60.50is slowern0.50Price: 3.901.000.50due to40.501.00product mix changes or rising cost ernment implements pricecontrols over key products20Bear CaseSlower retailMarginLower SSS growthBase CaseFaster retailsexpanMargin upside from more high GM products salesHigher SSS grow

28、thBull Casesdecline due to fewer high GM productssalesexpanSource:Research4haidje.rustaupiHAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital Management1.903.905.90PriceHK$3.90Derived from DCFysis based on our base-case scenario.Bull22.7x 2014e Retail drugexpanand new product launches drive caseEP

29、Sgrowth well ahead of rivals: 1) faster newaddition through HK$5.90acquisition &anic build; 2) the number of high GM productsgrows by 30% annually; 3) SSS growth exceeds 20%.Base15.0 x 2014e Retail drugnetwork expanand high GM products caseEPSlaunches as planned: 1) Acquisition of 150s, 70s in HK$3.

30、902014-2015; 2) buildanically 10-20s each year in2013-2015; 3) the number of high GM products grows at a 20% CAGR in 2013-2015; 3) SSS growth stays at 15%.Bear7.0 x 2014eRetail drugexpanencounters fierce competition caseEPSand new product launches fail: 1)ews addition in HK$1.902014-2015; 2) the num

31、ber of high GM products is flat/declines in2012-2015; 3) SSS growth is flat/declines.HK$7 006 00HK$5.90 (+123%)5 004 00HK$3.90 (+47%)3 00HK$ 2.652 00HK$1 90 (-28%)1 000 00Jan-12Jul-12Jan-13Jul-13Jan-14Jul-14Jan-15Company SnapshotExhibit 2GM Expan ProductsDriven by Sales Growth in High GM50%38.2%37.3

32、%38.8%38.2%40%36.9%35.1%29.1%27.6%27.9%27.0%30%25.7%23.5%20%19.5%19.4%20.7%18.8%16.7%16.0%10%0%2010A2011A2012A2013E2014E2015ESource: Company data,Research, E =Research estimatesExhibit 3Retails Addition CAGR: 20% in 2012-2015Exhibit 1Jian: Revenue and Margins Breakdown2012-15E CAGRRmb (mn)2010A2011A

33、 2012A2013E2014E 2015E8591,4742,3263,2244,3115,45433%Total SalesDistribution Retail4723869485261,4149121,7121,5132,2622,0492,8252,62926%42%Breakdown by Products29550834%966s66929%1,65887227%2,3521,25329%3,0581,80633%3,64839%High GM products% of total Others34%56430%Breakdown by Distribution MNote: J

34、 ian closed 24s in 2010. Source: Company Data,Research, E =Research estimatesDirect supply m% of total Traditional m Margins21225%64736325%1,11154223%1,78578924%2,4351,11226%3,1991,43526%4,02038%31%Distribution GM Retail GM Overall GM Overall OPM19.5%38.2%27.9%18.7%19.4%36.9%25.7%16.6%16.0%35.1%23.5

35、%13.0%16.7%38.8%27.0%14.4%18.8%37.3%27.6%13.1%20.7%38.2%29.1%13.1%35%Nete123180214325415530Source: Company data,Research, E =Research estimatesOur industry view is Attractive. Not only doxpect theindustry to outperform MSCI, but we also view it as aen forinvestors seeking to limit exure to market un

36、certa ies.The industry grew at a 20% CAGR in 2002-12, driven byfactorst we be ve will continue to support volume growthhe long term.5haidje.rustaupiHAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital Management1200# of existings# of acquireds1045# of newly opens9611000171740794150800600 3 60043118

37、5307949616004311852010A2011A2012A2013E2014E2015EDistribution GMRetail GMOverall GMCompany DescriptionJ ian Pharma Group mainly engages in pharmaceutical distribution and retail in Northeast China. The company operates the largest pharmaceutical retail chainhe region, in terms of the number of self-o

38、perateds, and is also the largest priva y owned pharmaceutical distr butor in Northeast China.China Healthcare Industry View: AttractiveCompany description: Incorporated in 1998, J ian Pharma Group mainly engages in pharmaceutical distribution and retail in Northeast China. The company operates the

39、largest pharmaceutical retail chainhe region,erms of the number of self-operateds, and is also the largest priva y owned pharmaceutical distributor in Northeast China.Main business: Pharmaceutical distribution and retail.Geographic coverage: Six subsidiaries and five logistics centers in Shen, Shiji

40、azhuang, Harbin, Jiamusi and Changc; 794 drugshe Northeast and.rs: J ian has 1,269rs, of which 836 are manufacturers and 433 are distributors.Customers: Approxima y 3,676, including approxima y 1,100 distributors, 2,400, clinics and pharmaceutical retailers.Employees: 4,984 full-time employees in sa

41、les and marketing, procurement and general administration as of June 30, 2013.Sales and profits: In 2012, revenue was Rmb2,326mn, operating profit Rmb302mn and net profitributable to shareholders is Rmb199mn. The gross margin was 23.5%, operating margin 13.0% and net margin 9.8%.Investment CaseSumma

42、ry &8-10%); 2) a direct supply miminates or reduthe number ofermediaries along the supply chain,significantly increasing efficiency and profitability; and 3)lower cost operations, wi Northeast China.focus on tier 3 and 4 cities inWe are initiating coverage of J ian Pharma Group (2211.HK)win Overweig

43、ht rating. It is the leading pharmaceuticalProven Acquisition andegration Ability: J ian has andistributor and retailer in Northeast China, with fast growth and high margins, and we think it will continue to expandexcellent track record in acquiring suitable companies at compelling valuations and im

44、proving their operations. Overraly and deliver +30% top- and bottom-line CAGRs in2010 to 2012, J ian sucsfully acquired andegrated2013-2015, as it benefits from its innovative574 retails and three local distributors by 1) acquiringvalue-chain- egrated business m, expanding retail andthem at cheap va

45、luations of 8.0-9.0 x P/Es, and 2) implementing business initiatives to improve business performance within six months to a year, by optimizing product mix, and providing training and increasing incentives for its sales staff.distribution network, proven acquisition andegrationcapability, high-GM pr

46、oduct offering and direct supply m In addition, its shares are attractively trading at HK$2.65,about a 40% discount to its distributors and retailers peers average 2014 P/E of 17x.Sound Growth Strategies Ahead:xpect J iansOur 12-month price upside and aof HK$3.90 imp s nearly 50% P/E of 15x our 2014

47、 estimated EPS ofgrowth strategiesult in furthenetration of lower tiercities and counties in Northeast China, and we are confident it will continue to grow quickly and improve its profitability via increased economies of scale and better efficiency. We expect it to 1) expand high-GM product offering

48、s; for example, we forecast high-GM products to grow at a 21% CAGR inRmb0.21 (HK$0.26), compared wi China healthcare names, and aage of 19x for age of 17x for itsnearest peers, such as Sinopharm and Beijing TongrentangChiMedicine.2012-2015; 2) increase sales via its direct supply m; for toAs it is a

49、 smaller and regional pharmaceutical distributor and retailer, we think J ian Pharma should trade at a discount to its larger competitors, which are trading in a range of 16x-24x 2014 EPS on consensus. The stock is now trading at 10.2x our 2014 EPS; we do not think such an extreme discount isexample

50、,stimate sales from its direct supply mincrease to 33% in 2015 from 29% in 2012; and 3) add moreretail drugs; for example,xpect the number of its AGR of 20% inretail drug pharmacies to grow 2012-2015.justified, given J peer group. expected retailians higher grownd marginsn its nhexpect earnings resu

51、lts and faster acquisition to drive its valuationKey Investment Concernsnear term. trade assignhe long term, we be ve the company should omparable level to its peer group e.g. 15x-20 x. We1)Highly fragmented and competitive pharmaceutical distribution and retail industries, which are subjected toof

52、15x in 12 months, asxpect theextensiveernment superviand pany to suc thus it deservessfully deliver on its acquisition strategy and re-rating.2)Slower grownd declining profitability in bothpharmaceutical and retail industries.Innovative Business M; High Grownd Margins:Unlike its competitors in pharm

53、aceutical distribution and3)Potentialernment policies may put downwardretailing industries with slower grownd decliningprere on drug priand reduce fitability, J ian has grown vigorously, with total revenueand nete CAGRs of 65% and 36% respectively in4)J ians business is heavily concentrated on North

54、east and Northern China.2010-2012 and a gross margin of 23.5% and operating margin of 13.0% in 2012. We attribute this to its unique businessm, with: 1) large sales of products with high gross5)Connected tran create concern.ions for its licensed products maymargins, e.g. licensed products and produc

55、ts with exclusivedistribution rights, whiche 50-60% gross margins for retail(versus an industry average of 20-30%) and 30-40% gross margins for distribution (versus an industry average of6haidje.rustaupiHAIDJE RUSTAU 01/17/14 01:38:47 AM Pine River Capital ManagementInvestmentitivesHigher Retail Pha

56、rmacy Industry Growth in Northeast ChinaThe pharmaceutical retail market in Northeast China has grown at an 18% CAGR to reach Rmb16.7bn in 2012 fromthe coverage of medical insurance is highern the averagelevel in China e.g. the population covered by UEBMI (which covers urban workers) in Northeast Ch

57、ina was 26.9% in 2012, above the 19.6% coverage rate nationwide.Prevalence of chronic disease: Northeast China has cold weather and long w ers; together with local dietst includeRmb8.3bn in 2008 (highern the 15% nationwide figure).According to the China South Medicine Economy Research Institution (a

58、lso known as NFS), the CAGR in 2012-2016 will be 20.6% (versus 19.7% nationwide), driven by the following four factors.a lot of red meat and alcohol, the result is a greatrevalenceof chronic diseasech as cardio-cerebral vascular diseasesand metabolic diseases.Exhibit 4Higher Retail Pharmacy Sales Gr

59、owth in Northeast ChinaConsolidation Opportunities Abound at Industry Inflection PoThe drugindustry in China is highly fragmented, with 64%500465China Drugs SalesNortheast China Drugs Sales388ofs single operated shops. Such a high degree of industryNortheast China Retailing Sales 2008-2016E CAGR: 19

60、% China DrugSales 2008-2016E CAGR: 17%fragmen ion creates opportunities for consolidators. The total400320number of drugs declined by -0.02% YoY in 2012, the265drop since 2007, signaling an inflection pofor the drug retail227industry. The number of chain drugs rose by 4% YoY,and the number of indivi