Yuyue Medical (002223): Performance in line with expectations, waiting for capacity release

Yuyue Medical (002223): Performance in line with expectations, waiting for capacity release
The first quarter of 2019 results are in line with expectations. On the evening of April 22, the company released the first quarter report of 2019, and achieved operating income in the first quarter of 19.10,000 yuan (+15.33%), net profit attributable to mother 2.4.7 billion (+15.41%), deducting non-attributed net profit2.3.9 billion yuan (+16.36%), and performance was in line with expectations.We believe that due to the difference in production capacity and quarterly performance distribution, the company’s net profit growth attributable to its mother in the first quarter of 2019 accelerated from low to high, showing an acceleration trend, similar to 2018.We maintain our profit forecast and expect the company’s EPS for 2019-2021 to be zero.87/1.05/1.27 yuan, 28.73-30.47 yuan target price, maintain “Buy” rating. The growth rate of performance in 2019 may be low or high, and the operating cash flow will be 南京桑拿网 affected by abnormal expenditures. The company expects that the Danyang Phase II base will not be put into production until 2Q19, so the 1Q19 operation is still subject to energy consumption.In addition, the base of return to net profit in 1Q18 is relatively high (accounting for 29% of the 2018 forecast), so the growth of 1Q19 performance is slightly inclined.We believe that the conversion of new production capacity is gradually released, and the company’s net profit growth attributable to its mother in the 2019 quarter accelerated to show a trend of low to high, similar to the situation in 2018.The company’s 1Q19 net operating cash flow was -1.190,000 yuan (0 in the same period last year).The US $ 2.6 billion was mainly due to the company’s participation in the Tmall brand day and prepaid bids for the total contract of hospitals for procurement of non-Company production equipment totaling more than 76 million, after which extraordinary expenditures. Increasing R & D expenses, increasing the R & D expense ratio by 1Q19 and increasing the intensity of new product development. The R & D expenses were 21.64 million yuan, an annual increase of 202%, and the R & D expense ratio increased by +1.11 points.We believe that increasing research and development expenditure will reduce the net profit margin and impact the company’s current performance, but it will be beneficial to the company’s long-term development.The company’s gross profit margin, sales expense ratio and financial expense ratio reached 41 in 1Q19.11%, 9.21% and 0.42%, respectively -0 per year.50pct, +0.70pct and -0.68 points. Home medical online sales are expected to maintain a high boom, and clinical subsidiaries continue to grow steadily. We believe that the company’s performance in 2019 will continue to grow steadily: 1) Home medical: Online channels are the main driving force for the company’s sales growth. We expect the company’s online sales to continue to maintain 35 in 2019.-40% high growth rate, maintaining a growth rate of about 10% in the next month; 2) Clinical medical treatment: We expect Zhongyou to maintain a steady growth of 25% in 2019, and Shangyi Group will undergo 2019 after technical reform in 2019Annual operating expectations are back on track. Continue to be optimistic about the company’s long-term growth potential and maintain a “buy” rating. Although the growth rate in 1Q19 is slightly marginal, we remain confident in the company’s steady performance in 2019 and maintain its profit forecast.8.73/10.53/12.77 trillion US dollars, an annual increase of 20% / 21% / 21%, the current expected corresponding PE for 2019-2021 is estimated to be 27x / 23x / 19x respectively.Taking into account the company’s breakthrough breakthroughs after 2Q19, the products are more abundant, and the platform’s advantages are prominent. We maintain the company’s PE estimate of 33x-35x in 2019 and maintain a target price of 28.73-30.47 yuan unchanged, maintain “Buy” rating. Risk warnings: low expectations for the release of new capacity; low expectations for the integration of clinical channels; offline growth of e-commerce.