Rapid growth of clinical trial consulting business of tag

Key investment points: 1 The company's leading position in the domestic cro industry will be further consolidated At present, the concentration of cro industry in China is higher than that in the United States, mainly because only 6-7 enterprises can establish and improve quality control system and meet international standards With the increasing business requirements, the concentration is expected to further improve At present, the company has covered more than 400 clinical trial centers in 52 cities (200 of which can do international multi center clinical trials) In 2013, the company increased orders by RMB 550 million and sales revenue by RMB 336 million The growth rate of new orders exceeded the growth rate of revenue for five consecutive years The company's share in the industry has increased from 0.88% in 2008 to more than 2.19% in 2010, which will continue to increase 2 Profit growth in the second half of the year is expected to increase with tax rate adjustment In the first half of the year, the company's revenue was 230 million yuan, a year-on-year increase of 38.83%; net profit was 54.22 million yuan, a year-on-year increase of 17.21%; non net profit was 51.79 million yuan, a year-on-year increase of 12.93% There are three reasons for the lower growth rate of profit than that of income: first, the income tax rate of the parent company is temporarily paid in advance at 25%; second, there are more than 7 million equity incentive fees in the first half of the year; third, with the completion of the layout of the Asia Pacific region, the management cost has increased (the management cost has increased by 82.84% year-on-year) In the second half of the year, the income tax is expected to be adjusted from 25% to 15%, which will significantly increase the growth rate of apparent profit 3 The slow progress of new drug review will affect the growth of income of clinical trial technical services (overall outsourcing business) In the first half of the year, the company's clinical trial technical service revenue reached 113 million yuan, an increase of 14.33% The new drug evaluation system is becoming stricter and the progress is slow, which leads to the decrease of new projects The approval period of major new drugs is 9 months, and the waiting time for generic drug review is extended from 14 months in 2011 to 34 months (or even 4 years) in 2013 The company was expected to get the follow-up order of vivus in the first half of the year Due to the above factors, its international multi center clinical application has not been approved temporarily, and more Asian clinical data needs to be supplemented, which leads to the postponement of the company's original expected follow-up order In the first half of the year, it has a great impact on the orders of the company In addition, the R & D management of many foreign-funded projects in China has been strengthened, and the approval level has been raised from China to the headquarters level, which has also led to the slowdown of the project speed The number of personnel in the drug review department in the United States is ten times that in China The approval period of class 1.1 new drugs in China is about 9 months, while the 28 day filing system is implemented in the United States After the reform in Japan, the speed of examination and approval has been greatly shortened, prompting pharmaceutical companies to increase R & D investment At present, the voice of enterprises is high, and relevant reforms are expected to be launched In the long run, the progress of drug evaluation is expected to accelerate With the accelerated pace of domestic innovation, the proportion of orders of domestic pharmaceutical enterprises is expected to increase At present, we have cooperated with Hengrui pharmaceutical The proportion of domestic orders increased from 20% to about 30% last year 4 Clinical trial consulting services (including data statistics, SMO and other single businesses) become a new performance growth point In the first half of the year, the company's clinical trial consulting business revenue reached 116 million yuan, an increase of 74.68% The company will focus on the development of clinical trial data management and statistical business with fewer approval links Data statistics business revenue in the first half of the year was 74.3 million yuan, an increase of 110%, mainly due to the continuous growth of meistar business and outstanding performance of Tigermed BDM acquired last year Their clients are mainly independent international multi center clinical data statistics (foreign clients), not affected by national policies The data statistics business accounts for 10% - 15% of the total clinical projects, and can also be undertaken separately Through the integration of mestar, BDM, Jiaxing tiger and taiwan tiger, the company makes the whole data statistics business operation more effective and personnel utilization higher After the transfer of mestar to Jiaxing, the gross profit rate further increased Smo (clinical trial site management organization) will also be one of the company's key development businesses, with revenue of 13.66 million yuan in the first half of the year, an increase of 119% 5 Merger and acquisition integration brings business synergy and complementarity The restructuring of Fonda Pharmaceutical Co., Ltd has been completed at the end of July, with 69.84% of the shares Since July, the company has consolidated its financial statements In 2013, the company's operating revenue was 235 million yuan, with a net profit of 11.63 million yuan It is committed that the after tax net profit in 2014, 2015 and 2016 will be 5, 6 and 7.2 million dollars (3075, 3690 and 44.28 million yuan) respectively, maintaining an annual growth rate of more than 20% (it is estimated that the net profit will be increased by 2060, 2472 and 29.67 million yuan, The earnings per share increased by 0.07, 0.17 and 0.21 yuan, expanding the fields of biological analysis, CMC and preclinical technology The Asian data needed to be supplemented in the vivus project will be tested in Fonda pharmaceutical, which is also an example of the coordination effect of the cooperation between the company and Fonda pharmaceutical The newly acquired kanglihua mainly conducts GMP certification and registration (mainly for cosmetics, health care products, Chinese patent medicine and API export registration, which complements the existing registered business of the company The company also cooperates to set up industrial merger and acquisition fund, which is expected to further integrate upstream and downstream resources 6 Layout smart medical services The project was launched at the end of last year and is expected to be successfully developed and put into trial use this year It is a government led project, and the company undertakes big data analysis related to drugs It mainly provides relevant reports for the government and medical payers, and drug safety reports for pharmaceutical manufacturers In the future, it is expected to cut into the chronic disease management system to achieve data collection, interaction and integration 7 Further improvement of employee motivation and training Set up junior high school senior level according to specialty, solve promotion channel, encourage cross department flow The number of employees of the company increased from 240 in 2009 to about 1000, and the staff turnover rate decreased from 20% to 10% 8 Profit forecast and investment rating If we do not consider the consolidated statement of Fangda pharmaceutical, we expect the growth rate of net profit of the company from 2014 to 2016 to be 37% / 29% / 27% respectively, EPS 0.59/0.79/1.00 yuan Considering the consolidated statement, it is estimated that the revenue in 2014 will increase by 141 million yuan, then the earnings per share from 2014 to 2016 will increase by 0.07 yuan, 0.17 yuan and 0.21 yuan respectively, EPS 0.66/0.96/1.21 yuan According to the 35-40 times P / E ratio in 2015, the reasonable stock price range is 33-38 yuan, which will be "recommended" rating 9 Risk tip: order growth is lower than expected; business development is lower than expected.