The company's turnover in 2016 was 1,488.7 million, the company has maintained a growth rate of twenty percent for five consecutive years, and the company focuses on in vitro diagnostic products. The turnover of the parent company is only one-third of the company's overall turnover, so most of the company's turnover is consolidated turnover and consolidated profit due to expansion.
2017 mid-year report to see Lippon Instruments is a Sichuan center, the operator agent in vitro diagnostics and research and development of own products. By industry or product is divided into self-produced reagents, self-produced instruments, agent reagents, agent instruments. Among the self-produced reagents gross profit margin of 74.57% year-on-year decline of -1.52%. The gross profit of self-produced instruments was 36.99%, an increase of 9.46% year-on-year. Agent reagents gross profit margin of 39,63%, down -4.08% year-on-year. Gross profit margin of agent instruments was 21.95%, down -0.87% year-on-year. The overall gross profit margin has a downward trend.
Comparing its income statement and cash flow statement from the first three quarters of 2017 to the statement of 2011, we found that the net cash flow from operating activities was 497.76 million, which was lower than the net profit of 1,594.4 million, proving that the company's profit was only a paper profit, not supported by enough cash.The net cash flow from investing activities in the third quarter of 2017 was -183 billion dollars. Cash inflow from financing activities was $358 million. The company's operating cash flow is not ideal for the time being, so the company still needs a lot of financing to develop, and the company should vigorously increase the account recovery cycle and improve the accounts receivable to reduce the company's financing pressure.
3. Look at the experience focus also look at the company's business philosophy
The company's business philosophy is mainly manifested in two aspects: the degree of emphasis on marketing and the degree of emphasis on research and development.
Selling expenses: the company in the third quarter of 2017, selling expenses on the investment of up to 205 million yuan, a year-on-year decline of 16.80%, the sales fee is slower than the growth of sales revenue (29.56%).
R & D expenses: 2017 semi-annual statement to see, overall there is a downward trend, the personnel is an increase in the proportion of inputs or a little symmetry is lacking.
The company's treatment of sales is still relatively important, scientific research personally feel a little gap with the company's strategy.
Second, the management level
Management level analysis, we focus on its efficiency and risk
(1) look at the efficiency to see what?
To look at efficiency is to look at its turnover rate. The input/output ratio is also the efficiency of the company. in 2016, the company's sales revenue of 1,488.7 million yuan, total assets of 3,359 million yuan, total asset turnover rate of about 0.443 times, predicted that 2017 should be in 16 years equivalent to about.
Inventory turnover: inventory turnover days in 2016 was 164.93 days, slightly higher than the inventory turnover rate of 179,94 days in 15 years, and the inventory turnover days in the third quarter of 2017 was 183.96 days. Don't know much about this industry, but the company is not doing much to improve its control in this area.
Accounts receivable (including notes receivable) turnover: in 2016, the company's accounts receivable turnover was 165.53 days. It was lower than 163.39 days in 2015.The accounts receivable turnover rate was 181.46 days in 2017. The company has not changed much in the cycle of accounts receivable may be with the strengthening of the cycle of sales accounts, which leads to the company's profit on paper. The company should strongly strengthen in this area, the company's ability to negotiate with customers hospitals need to be strengthened.
From the efficiency point of view that overall there is no change, the company did not make a lot of attention to the efficiency of this piece.
(2) look at the risk of looking at what?
The core is to look at its asset layout and asset quality. The so-called heavy assets means that it is more difficult to realize, and the so-called light assets means that its assets are easy to realize. Tongze Medical's cash assets in 2016 only accounted for 22.34% of total assets, of which non-current assets accounted for 70.7% of total assets.In the third quarter of 2017, cash assets only accounted for 22.3% of total assets, of which non-current assets accounted for 71% of total assets. The company's non-current assets have also increased the more. The company is an asset heavy type of company. The company's high proportion of fixed assets, I estimate that it should be more expensive instruments and equipment, which is different from other pharmaceutical companies.
Third, the financial level
Financial analysis contains two elements: controllable financial risk and the lowest cost of capital.
The higher the debt, the higher the risk of the company, and vice versa, the lower. Of course, the higher the debt ratio, the lower the cost of capital tends to be, because the cost of debt is theoretically lower than the cost of shareholders' equity. The company's debt ratio was 15.67% in 2015, 15.38% in 2016, and 24.69% in the third quarter of 2017, which puts the company on the low side of the debt spectrum, but it has been trending up significantly this year.
In 2016, the company's short-term solvency was 4.47 times,,the current ratio was 2.69 times in the third quarter of 2017, the company's solvency is relatively strong.
The company's return on total assets was 15.93% and return on net assets was 12.97% in 2016, and return on total assets was 13.00% and return on net assets was 10.45% in 3Q17.
Summary:
Mike Bio in general the company has not made great improvements in management, the company is still walking along the original road, while with the company's continued expansion of the company's some aspects of the company is still lower. The company's biggest point of view is that sales are basically increasing by 20 percent per year, profits are also increasing by about 10 percent, but the company is also a common problem in the medical industry is that accounts receivable is too long, resulting in operating cash flow is much lower than the profit, resulting in the current profits are paper rich. But taking into account his customers are hospitals, business integrity and other reasons, can be appropriate for the credibility of the profit increased. But the company is now a rapid expansion of time needs a lot of financing to spend. Personally feel that the company can make appropriate improvements in this regard, while improving the company's management capabilities.
? From the company's valuation PE: 33.9, PB: 5.05, static FCF return: 0.5%. ROE: 12%. From these it doesn't meet my buy requirement. My buy requirement is PE:25.PB:3 or so, this company can wait and see and wait for the value to return.