Pre-loss of more than 2.2 billion yuan! People's fu medicine 3 billion goodwill "thunderstorm" landed at once

fu medicine has recently attracted market attention. First at the end of 2018 Fentanne "black swan" event, and then in January this year, the company's earnings forecast showed a sharp decline, the same day received an inquiry letter from the Shanghai Stock Exchange, the people fu medicine to the hot spot. Next, through the problems brought about by goodwill, to learn more about human medicine.Performation of Goodwill Impairment Results Thunder
On January 29th, Renfu Pharmaceuticals issued the 2018 Annual Results Pre-Loss Announcement, which said that, according to preliminary estimates by the financial department, the net profit attributable to shareholders of listed companies is expected to be realized in 2018 compared with the same period last year (2017 net profit attributable to shareholders of listed companies 2,068 million) will show a loss. The net profit attributable to shareholders of listed companies was RMB2.200 billion to RMB2.700 billion, and the net profit attributable to shareholders of listed companies, net of non-recurring gains and losses, was RMB2.500 billion to RMB3.00 billion (net profit attributable to shareholders of listed companies in 2017, net income excluding non-recurring profit and loss was RMB559 million).
compared with the previous excellent performance contrast, in the past seven years, the compound growth rate of revenue of Human Fu Pharmaceuticals reached 32.06 percent, from 2.205 billion yuan in 2010 to 15.446 billion yuan in 2017, and the net profit of the parent company increased from 216 million yuan in 2010 to 2.069 billion yuan in 2017, nearly 10 times in seven years.
Founded in 1993 and listed on the Shanghai Stock Exchange in 1997 (600079. SH), the company's current business structure is drugs, other medical devices and health, of which drugs in the company accounted for a relatively large 76.95 percent, the company's drugs are mainly nervous system drugs, fertility regulation drugs, Uyghur ethnic drugs and biological drugs and other sub-sectors. In recent years, the company began to involve the U.S. generics business area, at the same time in the field of pharmaceutical circulation and the large health industry continue to layout, in order to achieve the deep integration of the entire pharmaceutical industry chain.
According to the announcement, the reason for the loss is due to changes in market supply and demand, 2018 wholly-owned subsidiary Epic Pharma, LLC's main product Bear deoxycholic acid capsule prices fell sharply, resulting in the company's sales revenue, gross margin, net profit and other operating results significantly reduced, while important products oxycodone slow release tablets are still not approved in the FDA review process, after impairment testing, the company intends to account for goodwill impairment losses and intangible assets impairment losses of about 3 billion yuan.
other words, the company's performance is expected to be close to $3 billion, mainly due to impairments on goodwill and intangible assets. According to the Company's third quarter 2018 report, the Company's goodwill was nearly $6,655 million, or 38.71% of its net assets, and the company's performance was affected by significant impairments in goodwill.Exceptiation letter on the day of the advance loss
on the night of the announcement of the performance forecast, the Shanghai Stock Exchange issued a quick inquiry letter, also questioning the impairment of the goodwill of The Company:
1. The Company's supplementary disclosure did not include the impairment of goodwill in 2017, and in 2018, whether there were any cases of improper management of the current financial statements through impairment
; One of the main reasons for the impairment of goodwill is the sharp decline in the price of bear deoxycholic acid capsules, the main product of the underlying asset in 2018, indicating the contribution of the product to the performance of the underlying asset, as well as the timing and reasonableness of the signs of impairment of
goodwill; 3. Another major reason for the impairment of goodwill is that the important product oxycodone reprieve tablets have not yet been approved during the FDA review process, and the matter pre-exists, is not an emergency in 2018 and is reflected in the valuation of asset acquisitions in 2016, Therefore, the company's reasonableness in calculating large impairments of goodwill in 2018 is questionable.
In fact, one of the reasons for the impairment of goodwill bear deoxycholic acid capsule prices fell sharply, in 2017, the human fu medicine bear deoxycholic acid capsule sales of 2544 million bottles, achieved a net profit of about 210 million yuan, accounting for the company's net profit In the first half of 2018, Epic Pharma's revenue was 245 million yuan, down 32% yoY, and net profit was RMB8.44 million, accounting for 1.23% of the company's net profit for the first half of 2018, down 91% YoY. In other words, Epic Pharma, LLC's product Bear Deoxycholic acid capsule company accounted for a small proportion of the company's total net profit.
Another major cause of goodwill impairment, the exchange's inquiry also noted that oxycodone tablets, which did not exist prior to approval during the FDA review process, were not an emergency in 2018 and were reflected in the valuation of asset acquisitions in 2016.
does this huge amount of goodwill come from?
there is no goodwill without consolidation, which arises only from the consolidation process and reflects the financial statements, which are the shares of the fair value of net assets paid by the consolidated party that exceed the fair value of the net assets identified by the consolidated party. Since 2010 began to enter the extended merger and acquisition, the reputation of People's Fu Pharmaceuticals continues to improve. Goodwill increased nearly 44-fold between 2010 and 2018H1, from 151 million yuan in 2010 to 6.655 billion yuan in the third quarter of 2018.
Xinkangjie through inquiries people Fu Pharmaceutical's annual report of nearly 9 years learned that the company through continuous acquisition to enrich business types, including in 2012 through the acquisition of Beijing Barry Medical Devices Co., Ltd. began to dabble in the field of diagnostic reagents, 2013-2015 continued to enrich the production, wholesale and sales of pharmaceutical equipment, 2016 began to lay out international drug research and development, through the acquisition of the United States Epic Pharma, through 3.462 billion yuan, LLC has increased its competitiveness in the international market by nearly $2.7 billion, acquiring a 100% stake in Ansell Ltd. in 2017 and expanding its sexual health business to more than 46 acquired companies in the first half of 2018. Human Fu Pharmaceuticals is through continuous asset acquisitions to complete its "to become a leader in the pharmaceutical and health sector segment" development strategy, but also laid a goodwill mine.
, then, why does Manfu Pharmaceuticals take a large amount of goodwill impairment in spite of the sharp decline in performance?
, goodwill has the following characteristics: First, the impairment of goodwill once the occurrence of subsequent can not be transferred back. Through accounts receivable bad debt preparation and return, enterprises can carry out certain profit management, through goodwill impairment to reduce the current profit, but can not be followed by the transfer of goodwill impairment and then increase profits; For the company, it is better to let the "goodwill" of this thunder one-time landing.
, it may be related to the goodwill impairment change and amortization discussed by the Accounting Standards Committee of the Ministry of Finance on 4 January 2019. If all according to 20 years of amortization, People's Fu Pharmaceuticals will be about 300 million more losses per year, once the performance can not beat goodwill amortization, will face consecutive negative performance situation. According to the requirements of de-marketing, 2 years loss change st, 3-year loss is the number ST, followed by de-listed companies have greater motivation to directly amortization, but also only affect the performance of the year. For the company, even if the performance of the year is very poor, the later performance growth will be greatly improved.The effect of goodwill impairment on subsequent profit growth and ROE
According to Guoxin Securities Economic Research Institute on the subsequent profit growth rate and ROE change path after goodwill impairment, assuming that listed companies meet the "short-term profitability" decline, "sustainable profitability" unchanged, it puts forward the assumption:
(1) enterprise's initial net assets are 100, goodwill balance is 50;
(2) the enterprise's opening net profit is 10, assuming that the long-term profitability of the enterprise remains unchanged, assuming that the unchanged net profit growth rate is 20
%;baseline scenario: the enterprise does not make any goodwill impairment
Scenario I: Goodwill uniform impairment, assuming an annual impairment of 10;
Scenario II: Incremental impairment, assuming starting with t-2, impairment 10,20,20
Scenario III: decreasing value, assuming from t Starting from 2, impairment 25,15,10
different goodwill impairment situation, the company's net profit growth rate changes will be different, where no impairment and uniform impairment, the company's net profit growth rate fluctuations are relatively small, and in the case of incremental impairment, the recent decline in net profit growth is greater than the decreasing value, and the rebound is relatively small, long-term trend towards the same.
Different goodwill impairment situation, the company ROE changes will also be different, incremental impairment situation in the next two periods OF significantly reduced, followed by rapid growth, and in the case of decreasing impairment ROE in the current period there is a larger decline, followed by rapid growth, long-term trend towards agreement.
Finally, if the "short-term profitability" of listed companies decline and "sustainable profitability" remains unchanged, the current period of substantial goodwill impairment, although the current performance has an impact, but the performance of the current period after the period whether the net interest rate growth rate or ROE, or relatively good; (New Kangjie)