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Shinva Medical Instrument:Net profit continued to fall despite slight improvement in Q2

发布时间:2016-08-26    研究机构:瑞银证券

Q2 revenue and profit trend improved slightly

H1 revenue was Rmb3.78bn (+9.9% YoY) and net profit attributable to the parent wasRmb94.19m (-32% YoY). Q2 revenue rose 12% YoY and net profit fell 12% YoY,improvements from Q1. Shinva's drug manufacturing equipment segment saw arecovery in production orders.

Medical equipment profit fell; healthcare services remained in the red

Due to the impact of GMP-related revamps, Shinva's medical equipment segmentposted a YoY profit decline in H1. Medical equipment had revenue of Rmb3bn (+3.6%YoY) and net profit of Rmb125m (-28% YoY), with gross margin down 1.53ppts;environmental equipment saw revenue growth of 15%, a gross margin decline of2.24ppts and net profit growth of 25% YoY (to Rmb2.5m); drug and equipmentdistribution revenue rose 5.83%, gross margin was up 1ppt and net profit was down35% YoY (to Rmb1.51m). The healthcare service business logged revenue ofRmb200m, with a loss of Rmb570k.

Expense ratio rose YoY

Q2 expense ratio rose 0.85ppt YoY. The selling, administrative and financial expenseratios went up 0.4ppt, 0.2ppt and 0.2ppt YoY, respectively.

Valuation: Rmb20.15 price target

Our DCF-based price target of Rmb20.15 assumes WACC of 7.6%. The medicalequipment business saw profit fall further on GMP-related revamps. Although ordersrecovered somewhat, a return to positive growth will likely take time. Furthermore,while the healthcare service segment has begun growing rapidly, it still requiresinvestment and contributes little to profit. Therefore, we maintain our Sell rating.