[Editor's Note from Securities Star] 2015 is a year of change, and new technologies and new models are our stock selection strategies throughout the year. With the advancement of public hospital reform, the pharmaceutical bidding system has put unprecedented pressure on pharmaceu

[Securities Star Editor's Note] 2015 is a year of change, and new technologies and new models are our stock selection strategies throughout the year. With the advancement of public hospital reform, the pharmaceutical bidding system has put unprecedented pressure on pharmaceutical companies. We believe that the increase in concentration of pharmaceutical companies and the flattening of circulation are the biggest changes in the pharmaceutical industry in 2015. In this case, achieving secondary entrepreneurship with mergers and acquisitions and integration is the common choice of pharmaceutical companies. Therefore, new technologies and new models have become our main path to stock selection in 2015. Tumor immunotherapy is the most important hot topic in the field of disease treatment in the next 3-5 years. The stock market is risky, so be cautious when investing. The individual stocks mentioned in the article are for reference only and are not used as trading advice.

Pharmaceutical and biological industry: Meet the best era Tumor immunotherapy

Category: Industry research Institution: Qilu Securities Co., Ltd. Researcher: Xie Gang Date: 2015-05-27

Investment points

2015 is a year of change, and new technologies and new models are our stock selection strategies throughout the year. With the advancement of public hospital reform, the pharmaceutical bidding system has put unprecedented pressure on pharmaceutical companies. We believe that the increase in concentration of pharmaceutical companies and the flattening of circulation are the biggest changes in the pharmaceutical industry in 2015. In this case, using mergers and acquisitions and integration to achieve secondary entrepreneurship is the common choice of pharmaceutical companies. Therefore, new technologies and new models have become our main paths for stock selection in 2015. Based on the 2014 monoclonal antibody drug topic, we have sorted out the global research hotspots in tumor treatment and presented investors with tumor immunotherapy topics.

Tumor immunotherapy is the most important hot topic in the field of disease treatment in the next 3-5 years. Tumor immunotherapy is called the fourth therapy after surgery, radiotherapy, and chemotherapy. It originates from nonspecific immunity, but this method is inefficient and has great side effects. On the contrary, the new immunotherapy activates specific and important immune cells, directly targets the attack of cancer cells, improving efficacy and safety, and is a hot topic in global research.

In the next five years, the sales scale of single drugs in the field of tumor immunotherapy is expected to exceed 10 billion yuan, and the sales scale of immune test mucosa in 2020 is expected to exceed 7 billion yuan, with CAGR 33%. In 2013, the global biotech drug market size reached US$165 billion, and the CAGR reached 13% from 2003 to 13, which was far higher than the CAGR of the same period. The treatment of tumor diseases has gone through traditional treatment methods to targeted treatments, and then to the latest cellular immunotherapy. According to Bloomberg, three of the top 20 anti-tumor drugs in 2018, and the sales scale of a single drug is expected to exceed 10 billion yuan. Yervoy, the first tumor immune test numbmab, was launched in 2011, sold more than US$1.3 billion in 2014. The global immune checkpoint inhibitor market is expected to grow from approximately US$1 billion in 2013 to US$7 billion in 2020 (annual growth rate of 33%).

Analysis of the industrial structure and growth path of domestic enterprises in the field of tumor immunotherapy: Continuous integration and optimization of technology and sales channels. The high barriers to tumor immunotherapy drugs determine high concentration. The world's major tumor immunotherapy varieties are concentrated in 5-6 large pharmaceutical companies (BMS, Roche, Merck, AstraZeneca, Pfizer, etc.). Technology is the core competitiveness of the industry. As the global leader in CART drug technology, JUNO, innovative R&D, has attracted much attention in the capital market. The stock price rose by 70% on the day of the IPO. Unlike abroad, my country's tumor immunotherapy drugs are currently in the early stages of research and development, and the product homogeneity is serious, but because of the inherent technical barriers of tumor immunotherapy drugs, they are still affordable by niche people. We believe that domestic tumor immunotherapy will inevitably go through the competition of channel resources to the competition of technical strength, which also determines the fate of R&D companies to go public or be acquired, and large pharmaceutical companies to leverage their advantages in R&D and resource integration to quickly intervene to build core competitiveness.

Investment advice: The upgrade of disease treatment plans lays the certainty of industry growth, thus guiding the investment direction. Oncology treatment plans have been upgraded from traditional treatment, targeted treatment, and immunotherapy. Immunotherapy drugs have become the biggest beneficiaries in the upgrade process. We recommend that investors pay attention to the value investment opportunities in the domestic industry. In terms of target selection, we believe that R&D-driven companies with certain product accumulation and resource integration companies with upcoming product approval have industry first-mover advantages.We are optimistic: 1) Companies with hospital channel trends, such as Shanghai Coleson and Sino-Mei Cons (Beilu Pharmaceutical), 2) Companies with R&D advantages and resource integration capabilities, such as Yaoji Poker, Galaxy Investment, Xiangxue Pharmaceutical, Shanghai Kaibao, Hengrui Medicine, Shuanglu Pharmaceutical, etc. 3) R&D company: BeiGene (to be listed). It is recommended to pay attention to immune cell storage companies: Zhongyuan Xiehe, Guanhao Biological, Boya Stem Cells, Nanhua Biological, etc.

Risk warning: negative medical insurance payment policies, talent loss caused by inadequate corporate talent incentives, irregular domestic technical approval

Beilu Pharmaceutical: Iodapalol injection was approved and rich contrast agent product line

Beilu Pharmaceutical 300016

Research institution: Southwest Securities Analyst: Zhu Guoguang Date of writing: 2015-05-27

Event: The company announced that Iodapalol injection has obtained the "drug registration approval document" approved and issued by the State Food and Drug Administration and belongs to the 6th category of chemical drugs.

Domestic contrast agents will benefit from import substitution and their market share is expected to expand. The overall market size of contrast agents in my country is about 4 billion yuan, and its main suppliers include Bayer, GE, Boleco, Yangzijiang, Hengrui and Beilu Pharmaceutical. For example, from the per million population of CT and MRI, my country's contrast agent market still has a lot of room for growth. The CT and MRI ownership per million people in developed countries reached 30 and 15 units in 2009, while my country only had 7.4 and 2.1 units, and in 2013 it was about 10 and 4.5 units, which was still a huge gap compared with developed countries. We believe that with the increase in the number of CT and MRI per million people in my country, it will bring a significant expansion effect to the contrast agent market. According to the data from PDB sample hospitals, X-ray and magnetic resonance contrast agents have grown rapidly, and their sales in 2014 are expected to reach 1.93 billion yuan, a year-on-year increase of 17%. With the acceleration of the expansion of the domestic contrast agent market, the sales growth rate in sample hospitals may exceed 20% in the next 3-5 years. Moreover, imported contrast agents still account for a large market share. We believe that the replacement of domestic contrast agents for imported products will be the future trend.

iopamol injection has stable properties and will thicken the company's product line after approval. Iodapalol injection belongs to the second generation of nonionic monomer X-ray contrast agent and is a Class A of National Medical Insurance. This contrast agent is suitable for enhanced scanning in neuroradiology, angiography, urinary tract angiography, arthrography, fistula tract angiography, digital subtraction angiography and CT examination. Its advantages include good development effect, low toxicity to blood vessel walls and neural tissues, and stable properties. 1) The company has four contrast agents: iodixanol, iodhelol, gadopentate gluamine, and ferroammonium ferricinate effervescent granules. Their adaptability range includes myelography, organs, digestive tract, head, etc. The indications of the iodapalol injection approved this time are mainly aimed at angiography, which expands the scope of indications for the company's contrast agents; 2) my country's iodapalol market is exclusively owned by the Italian original research company Borecco. According to the data of the sample hospital, the sales in 2014 are expected to be 240 million yuan respectively, with a compound growth rate of about 14.3% from 2009 to 2014. With the approval of this application of the company, import substitution may be achieved by relying on its price advantage in the future, further consolidating the company's leading position in the contrast agent market.

performance forecast and valuation. The company has a complete range of contrast agent products and has a high coverage rate for the target hospital. As my country's CT and MRI ownership increases, the company's contrast agent business will usher in rapid growth, and it is expected that the comparison agent revenue may exceed 430 million yuan in 2015. It is predicted that the company's EPS will be 0.49 yuan, 0.65 yuan and 0.86 yuan from 2015 to 2017, corresponding to the price-to-earnings ratio of 119 times, 91 times, and 69 times. Considering that the company has deployed cutting-edge biotechnology such as tumor immune cell diagnosis and treatment, gene sequencing through epitaxial mergers and acquisitions, the market space is large. Maintain the "buy" rating.

Risk warning: Product prices may drop, mergers and acquisitions may not meet expectations.

Yao Ji Poker: The first launch of smart bicycles to explore the health entertainment industry

Yao Ji Poker 002605

Research institution: Anxin Securities Analyst: Zhang Ni Date of Writing: 2015-03-25

Rockefeller Smart Bike First Launch: The company's holdings, the brand Rockefeller, launched a new generation of smart bicycles launched by Rockefeller, a brand under the China-German Solomon, was officially launched in JD.com through crowdfunding. The smart bicycle realizes data statistics, route sharing, map navigation, health assistance, call reminders, device binding, mobile social networking and other functions, and manages cycling data through real-time connection of low-power Bluetooth to help users formulate healthier cycling plans. Just two hours after the crowdfunding began, the amount raised exceeded one million, and exceeded two million at around 2:00 pm. As of about 5:00 pm, the amount of crowdfunding exceeded three million, and it received support from a large number of users, indicating the market's recognition of the product.

With the help of sports style, the high-end bicycle industry has unlimited potential: my country is a world bicycle country with a total bicycle production of 60.13 million in 2013. Bicycles are born with a good mass base in China. With the improvement of residents' living standards and the guidance of high-standard competitions, the domestic bicycle fitness potential is very great, which is conducive to the promotion of mid-to-high-end bicycles. At present, domestic international events such as "Around Qinghai Lake", "Around Chongming Island Cycling Race", "Around Hainan Island Cycling Race", "Around China Cycling Race", and "Around Taihu Cycling Race" were born one after another. At the same time, various event companies, bicycle manufacturers and bicycle organizations are also actively organizing various amateur cycling events, including many well-known national events. According to statistics, nearly 20 million cyclists in my country are maintaining rapid growth every year. Cycling is becoming a healthy sport loved by more and more people. Solomon bicycles are in line with the global low-carbon travel style and will benefit from the great development of the domestic sports industry and the demands of residents' health and sports.

actively transforms into the big health and entertainment industry: the company mainly engages in the production and sales of playing cards. In the past two years, it has actively sought transformation. With the help of the carrier value of the high sales of poker, it has successively cooperated with Lianzhong Games, 500 Lottery Network, etc., and established an online company. In addition, the company also has a stake in Shanghai Cell Therapy Engineering Technology Research Center Co., Ltd. (accounting for 22% of the shares). Cell immunotherapy is at the forefront of the medical field and has great potential.

The company acquired 51% of the equity of Zhongde Solomon Bicycle for 125 million yuan in the early stage. Through the acquisition of Solomon Bicycle, the company may gradually enter the sports and health business in the future, realizing the organic combination of health and entertainment.

profit forecast and investment advice: We expect the company's revenue from 2014 to 2016 will be RMB 751 million, RMB 824 million and RMB 917 million, a year-on-year increase of 5.7%, 9.7%, and 11.2%; net profit will be RMB 123 million, RMB 143 million and RMB 174 million, a year-on-year increase of 4.7%, 16.7%, and 21.8%; earnings per share will be RMB 0.33, RMB 0.38, and RMB 0.47; we are optimistic about the transformation direction of the "big health entertainment" industry, maintain the "increasing holdings-A" rating, and the target price is 27 yuan.

Risk warning: Insufficient experience in transforming into the health entertainment industry and competitive risks.

Xiangxue Pharmaceutical: The integration of decoctions is expected to accelerate. The cutting-edge technology layout adds imagination space

Xiangxue Pharmaceutical 300147

Research institution: China Investment Securities Analyst: Zhang Lei Writing date: 2015-05-18

On January 30, 2015, we released the in-depth report "Stripe layout of the "three comprehensives" of decoctions, and high growth is expected in the future", which elaborated on the company's collection: the company has strategically laid out the field of traditional Chinese medicine decoctions, creating the "three comprehensives" of the entire industry chain, all categories and all channels, and is expected to become an industry leader; at the same time, small nucleic acid drugs and TCR cell therapy technologies that are deployed in the cutting-edge biomedicine field are in a leading position, and are expected to further improve the company's valuation level. Recently, the integration of the decoction industry is expected to accelerate, and small nucleic acid drugs and TCR are making positive progress, and our previous revision has been gradually verified. In addition, the company's launch of employee stock ownership plans also demonstrates the management's confidence in development.

Investment points:

The company's development strategy is very positive, with internal and external extension.① The company strives to build a full industrial chain, full categories and all channels of traditional Chinese medicine resources, with the goal of becoming a leading enterprise in the decoction industry with a market capacity of 100 billion yuan; ② The company is one of the leaders in the traditional Chinese medicine industry, with strong execution capabilities, and has led the company to gradually move to a higher platform after multiple transactions. The integration of management, business, resources and other aspects will maintain stable endogenous growth. In terms of external development, the company is expected to occupy an important position in the future integration wave of traditional Chinese medicine industry.

The decoction industry is facing strategic opportunities for mergers and acquisitions and integration, and the company has long been in a layout or called the integration leader. ① The "Traditional Plan for Traditional Chinese Medicine Health Services" establishes the traditional Chinese medicine industry as a national-level development field, and the status of the traditional Chinese medicine industry has been improved. The focus is on establishing wild traditional Chinese medicine, bulk traditional Chinese medicine production bases, and quality assurance systems for traditional Chinese medicine materials; ② The period of real standardization and industrialization of the traditional Chinese medicine decoction industry is not long. At present, there are many small and medium-sized enterprises in the industry, and the market is very unstandard. Recently, the country has increased its efforts to rectify the decoction industry; in the first quarter of 2015, 17 of the 21 companies whose GMP certificates were revoked were Chinese herbal decoction companies, accounting for 80%. The same period on December 31, 2015 is the deadline for the new version of GMP certification for the decoction company. Small and medium-sized enterprises are in short supply. Currently, more than 70% of enterprises have not completed GMP certification. At present, the decoction industry is facing a strategic opportunity for integration of business and sales. The company has long made arrangements in terms of external extension and has accumulated rich experience. It is expected to accelerate the pace of business and sales in the future and become the leader in industry integration.

small nucleic acid drugs and TCR cell treatments are developed smoothly, and cutting-edge technology layout adds room for imagination. The company has long been deploying in the field of small nucleic acid drugs and TCR cell therapy, and is in a leading position in China. ① The company cooperated with Suzhou Shengnuo, a leading domestic small nucleic acid drug research and development agency, to prescribe the drug "Cotrani", which is the first gene therapy drug in China. "Kotrani" has been recently included in the 21 priority review new drugs supported by the National Health and Family Planning Commission and Project, which has greatly accelerated the review speed and also reflects that the company's new drug research in this field is at the leading level in China. In addition, the company has also cooperated with the Department of Microbiology of the University of Hong Kong to develop broad-spectrum anti-respiratory virus infections in small nucleic acid drugs, and has made substantial progress. ② The company's TCR cell therapy technology path is not consistent with the international leading companies, and it has layouts in both cell therapy drugs and third-class treatment technologies; among which the third-class treatment technology is expected to be applied faster. At present, the PLA 458 Hospital has cooperated to carry out clinical research on the third type of treatment technology, and selected two indications for non-small cell lung cancer and liver cancer caused by hepatitis B virus infection. The first phase of the clinical trial was selected for treatment, and relevant data are expected to be found at the end of July. Recently, the British TCR cell therapy company Adaptimmune (ADAP) was launched with a valuation of US$1.2 billion, reflecting the market's recognition of the development prospects of this cutting-edge technology.

maintains a strongly recommended rating. We expect the net profit attributable to the parent company from 2015 to 2017 to be RMB 258 million, RMB 324 million and RMB 426 million, respectively. The current stock price corresponds to PEs in 2015 to 2017, respectively. Given that the company's "three-in-one" layout of traditional Chinese herbal medicines is basically formed, it is expected to achieve leapfrog growth through external mergers and acquisitions in the future and become the leader of the decoction industry with a market capacity of 100 billion yuan; at the same time, it is in the leading position in the field of gene therapy and cell therapy, and is expected to further increase the company's valuation.

has increased its target price to 49.01 yuan, corresponding to a market value of 25 billion yuan, and maintains a strong recommended rating.

Risk warning: Products outside the province are not as good as expected, new drug research and development risks, external distribution integration risks

Shanghai Kaibao: Can it exceed the market value of 20 billion yuan? It is optimistic that the external extension will continue to be promoted

Shanghai Kaibao 300039

Research institution: Qilu Securities Analyst: Xie Gang Written Date: 2015-05-15

Event: 2015.5.11-14, Shanghai Kaibao's stock price rose 23.9%, closing at 17.1 yuan, exceeding the target price we previously gave 16.9 yuan.

Comments on abnormal movement: The core logic of our recommendation company is: steady growth in performance + exploration of diversified extension. In the first quarter, the company's main business maintained a stable growth of 15%+. Since April, it has established industrial investment funds and acquired Xinyi Pharmaceutical. We believe that the expansion of external expansion has been substantially promoted.

is at the 10 billion market value. We believe that the company must rely on external expansion to achieve a 20 billion market.2015.3.25 The company announced its 2014 annual report, with net profit exceeding 300 million yuan for the first time. We released a research report "Stable performance growth, and continue to pay attention to the progress of the company's merger and acquisition", pointing out for the first time in the market, "If the company relies on a single variety of Tanreqing Injection, it is very difficult to achieve a breakthrough from 10 billion to 20 billion market value in the short term. At present, the progress of new products is slightly lower than expected. We will continue to pay attention to the progress of the company's merger and acquisition, the new product launch process and development progress."

In the first quarter of 2015, we are moving slowly on the road to a market value of 20 billion. We once again remind you to pay attention to the external extension: 2015 The company's stock price rose 25.8% in the quarter, far lower than the 35.5% increase in the pharmaceutical sector and 61.35% increase in the ChiNext. It ranks the lowest increase in the entire sector. From the perspective of the company's fundamentals in the first quarter, the year-on-year growth rates of revenue and net profit were 10.1% and 11.5% respectively, basically maintaining steady growth; in terms of endogenousness, Tanreqing Capsules was listed at the end of January; in terms of external expansion, the acquisition of the 1.1 new drug "Youxinding Capsules", a new drug in Chinese medicine, and the market performance was lukewarm. In the comments on the first quarter report of 4.20, we reiterated the logic of recommending the company. With a steady fundamentals, we pay attention to the company's promotion in external expansion.

is moving: Extended actions are gradually implemented, market attention is increasing, and the company has quietly reached a market value of 14.3 billion: 21, 2015, the company established an industrial investment fund (100 million yuan), announced the suspension of trading of 5.5, and the 5.11 acquisition of Xinyi Pharmaceutical resumed trading. Although the scale is small, under this series of actions, the company's stock price has risen by 40% so far, far higher than the three-month increase of nearly 15 percentage points in the first quarter, and the company's market value has also climbed to 14.3 billion yuan, which also confirms our judgment of the company. The company's current way out lies in changing its thinking while doing its main business, and accelerating the logic of external mergers and acquisitions. n What do you think about it later? Actively recommend it, but look at the extension. Adhering to endogenous + external mergers and acquisitions is the company's consistent development path. We believe that in terms of endogenousness, the gradual listing of Tanreqing Injection + product series development + new products is the basis for supporting the company's long-term and stable growth; while in terms of external expansion, it is an important foundation for the company to accelerate growth and model transformation. Medical reform continued to advance in 2015, and pharmaceutical companies faced unprecedented price pressure. Increased industry concentration, sales model transformation, and exploration of new models are necessary choices. In this context, we are optimistic about the extended development path that the company has already started.

We believe that factors that affect the company's stable growth in the next three years include: the release of Danreqing injection production capacity + serialized product development + external mergers and acquisitions. 2015-17 recommended investors pay attention to: serialized product development, gradually contribute to performance from 2015-2017. Based on the academic promotion of Tanreqing Injection, the company has developed Tanreqing Capsules, oral liquid, 5ml injection and other varieties. The capsules have been put into production at the end of April 2014. The self-operated and investment promotion model is promoted. The daily use cost of more than 100 yuan is conducive to clinical promotion. We expect this variety to gradually increase in volume in 2015. We conservatively estimate the use of 140,000 people-days in 2015 (the selection of high-end injection drug users of 1‰), and it is estimated that it will contribute income of 15-20 million yuan.

M&A is expected to continue to expand. We believe that in 2015, the pharmaceutical sector has made frequent mergers and acquisitions under policy pressure. With the current balance of over-sum funds of 300 million yuan, the company is expected to further accelerate the process of mergers and acquisitions and create a product line that supports the company's long-term and stable growth. In order to achieve the long-term growth of the company's performance, the company continues to pay attention to corporate mergers and acquisitions in areas related to anti-tumor, cardiovascular drugs and nervous system that have synergistic effects with itself. It is expected to carry out strong alliances or complementary mergers and acquisitions in terms of varieties, channels, etc. in the next three years. At the same time, we believe that from the perspective of the company's establishment of an industrial fund, it is not ruled out that the company will try to explore in new fields in various ways.

Profit Forecast: Considering the impact of the subsequent inclusion of Xinyi Pharmaceutical in the financial statements, we slightly increase the company's profit forecast. It is expected that the company's revenue from 2015 to 2017 will be 1.831, 2.291, and 2.695 billion yuan, respectively, with growth rates of 23.66%, 25.14%, and 17.57%, respectively, and the net profit attributable to the parent company will be 411, 469 and 539 million yuan, respectively, with year-on-year growth rates of 17.52%, 14.25% and 14.99%, corresponding to the diluted EPS of 0.59, 0.72, and 0.83 yuan in 2015-17. Considering the substantial advancement of the company's merger and acquisition process, a certain valuation premium is given, and 35-40PE is given in 2015, with a target price range of 20.6-23.6 yuan, which is raised to a "buy" rating.

We believe that if the company relies on a single variety of Tanreqing Injection (Xinyi Pharmaceutical has limited contribution to the short-term profit increase), it will still be difficult to achieve a breakthrough from 10 billion to 20 billion in the short term, but the company has shown a positive attitude in terms of mergers and acquisitions. We expect that mergers and acquisitions will be implemented frequently in 2015, and new products will also accelerate the listing process and development progress. We are optimistic about the company's external transformation path and continue to pay attention to the company's progress in mergers and acquisitions.

Risk warning: New product promotion is lower than expected, Chinese medicine price reduction risk, and mergers and acquisitions are slow

Hengrui Medicine: Enjoy the beautiful era of Hengrui

Hengrui Medicine 600276

Research institution: GF Securities Analyst: Zhang Qili Date of Writing: 2015-04-21

Core viewpoint:

0 in the first quarter of 2015, and the performance exceeded market expectations.

In the first quarter of 2015, the company's operating income and net profit were 2.2 billion yuan and 547 million yuan, a year-on-year increase of 28.0% and 40.2%, achieving an EPS of 0.36 yuan. The performance exceeded market expectations and met our expectations. As the number of preparation products that have passed the standardized market certification further increases, as new indications of apatinib and 19K and other innovative drugs are launched one after another, the company is expected to maintain a performance growth rate of more than 30% in the next 3-5 years.

The revenue growth rate of domestic business exceeded 20% in the first quarter. Standardizing market certification is conducive to maintaining the winning bid price ① The company's domestic business revenue growth rate in the first quarter was 22%, and it is expected to maintain the whole year. Contrast agents and infusions are still areas with faster growth rates. ② Among the provinces that have announced the bidding plan, products certified by FDA or EU enjoy policy preferences, and Shandong, Hainan and Fujian can even compete at the same quality level with original pharmaceutical companies.

is expected to contribute nearly US$100 million in 2015, and will continue to grow high in the future.

① The recognition of the formulation export revenue is customs declaration income (income brought by the company's production, the base price) + foreign commercial companies' share income (accounting for nearly half of the terminal revenue, the main source of profit). Among them, the delivery of customs declaration income is recognized, and the distribution revenue of commercial companies is recognized after the first quarter of shipment; ② The export revenue of the formulation in the first quarter was more than 90 million yuan, and the recognized profit is more than 80 million yuan, including the customs declaration income in the first quarter of 2015 and the sharing income of commercial companies in November and December 2014; ③ We expect that the annual production export sales will reach US$200 million based on the terminal caliber, and the net profit will be nearly US$100 million. As sevoflurane and fondapalu are listed and sold one after another, the export of preparations will continue to grow at a high rate.

innovative drugs 23 product arrays, some fields are comparable to multinational pharmaceutical companies.

① The company has applied and approved a total of 23 innovative drugs to the CFDA, with a market space of 19K greater than apatinib and is expected to be approved in 15 years. ② The company develops serialization in various fields, such as the diabetes field, including DPP-IV inhibitor regalliptin, SGLT-2 inhibitor henglaliflozin, GPR40 agonist furaparin, and long-acting insulin INS061. The product line is not weaker than international giants Eli Lilly and Novo Nordisk. ③Apatinib is 19,800 yuan per box, with revenue of 300 million to 40 million yuan in the first quarter, and 300 million yuan for the whole year is no problem.

Profit forecast and investment rating.

Company has formed a good situation of three-wheel drive of "generic drugs + innovative drugs + internationalization". The company's current share price is 54.49 yuan. We have raised our EPS in 2015-17 to 1.36/1.78/2.31 yuan, corresponding to PE 40/31/24 times, and maintain the "buy" rating.

risk warning.

The risk of price reduction of anti-tumor drugs such as oxaliplatin and docetaxel, the risk of new drugs such as 19K, and the risk of unstable orders for export products such as cyclophosphamide.

Shuanglu Pharmaceutical: Increase capital of Times Yinuo to lay out Internet medical chronic disease management

Shuanglu Pharmaceutical 002038

Research institution: Guosen Securities Analysts: Deng Zhouyu, Lin Xiaowei Date of Writing: 2015-05-20

Matters: [5T month abl1e6_SuShuangmeng Pharmaceutical Industry] Announcement: With Tianjin Times Yinuo Technology Co., Ltd., Li Fuhua and others, they formally signed the "Tianjin Times Yinuo Technology Co., Ltd. Capital Increase and Share Expansion Agreement" and the "Supplementary Agreement to the Capital Increase and Share Expansion Agreement of Tianjin Times Yinuo Technology Co., Ltd.". The company decided to invest 20 million yuan to participate in this capital increase. After the capital increase is completed, the company will hold 20% of Times Yinuo's equity.

Guosen Pharmaceutical’s view: The company’s capital increase and stake in Tianjin Times Yinuo will help its layout in the fields of Internet medical care and health management, enhance the company’s strength in the field of chronic disease medical care, and can effectively combine the resources accumulated in the field of drug treatment to explore a new model of integrated "treatment + service" diagnosis and treatment. In recent years, through independent research and development and cooperative research and development, the company has reserved more than ten products with outstanding competitive advantages in the field of diabetes treatment. This investment can complement the advantages of the company and Times Yinuo, build a platform for diabetes health management, and obtain a more mature entrance to the mobile medical terminal, laying the foundation for subsequent development. In addition, it can also explore and accumulate experience for the company's other chronic disease management fields such as liver disease, cardiovascular and cerebrovascular diseases, etc. This investment is the company's entry point for exploring chronic disease management and Internet medical care, laying the foundation for future innovative profit models.

We expect the company's EPS to be 1.86/2.38/2.95 yuan in 2015-17 respectively. The current stock price corresponds to 16PE of 28X, and its valuation is more attractive. We believe that the company has formed a complete strategic platform of "R&D + Production + Investment + Business" to form a virtuous cycle. Relying on excellent R&D strength at home and abroad, it continues to enrich product reserves in the fields of blood diseases, diabetes, anti-infection, liver disease, cardiovascular and cerebrovascular diseases, etc., and blockbuster new drugs will enter the harvest period one after another; at the same time, it has great potential in new fields such as cell therapy, genetic testing, Internet medical care, and chronic disease management, which will add imagination space in the future. For details, please refer to the in-depth research report "Big New Drugs Enter the Harvest Period, New Business Layout Adds Imagination Space" released by Guosen Pharmaceutical on April 29, 2015, and raised the reasonable valuation of one-year period to 76-83 yuan (corresponding to PE32-35X in 2016). The company has outstanding long-term investment value and maintains the "buy" rating.

Comments:

Tianjin Times Yinuo: The earliest company in China to engage in mobile Internet of Things health management.

Tianjin Times Yinuo Technology Co., Ltd. was established in September 2012. It is one of the earliest companies in China to engage in mobile Internet of Things health management. It is committed to using new mobile Internet technologies to realize patient self-health management and doctor mobile professional guidance, so as to truly realize the evolution of chronic diseases from point-based management to linear management. As of December 31, 2014, the company's total assets were RMB 5,200,845.12, the net assets were RMB 4,933,727.47, and the net profit for the year 2014 was -8,163,936.70 (unaudited).

After this agreement is signed, relevant parties will start the work of Times Yinuo Technology to issue shares in China and list on the stock exchange or list on the stock exchange system as soon as possible, and strive to complete the listing before June 30, 2019 or achieve the goal of listing in the stock exchange system before December 31, 2016.

Times Yinuo's chronic disease medical system is mainly aimed at 450 million domestic patients with three high chronic disease. Based on mobile Internet communication technology, it builds the most professional vertical doctor-patient communication platform in China to help patients quickly find doctors, provide comprehensive, timely, discounted and accurate medical information, and cooperate with the intelligent mobile hardware equipment developed by Yinuo to realize real-time collection, analysis, doctor-patient question-and-answer questions and answers, quick reminders and other services of sign parameters. At the same time, it integrates online high-quality medical resources to provide patients with real-time online family private doctor services. Yinuo’s health management platform can provide patients with healthy physical examination, management, consultation, self-diagnosis, early diagnosis, and drug purchase services, allowing patients to extend from traditional point-of-point treatment services to the current one-stop complete medical closed-loop services in pre-hospital, intermediate and out-of-hospital.

At present, Times Yinuo has pioneered a new model of diabetes mobile health management in the world, with the "Yinuo m-Health Mobile Health Management System" (32 patents and copyrights related to inventions, utility models, appearance designs, etc.) and the world's first mobile phone with intelligent food control function - Yinuo Diabetes Mobile (Tian Food and Drug Supervision Machinery (Certificate) No. 2400072). The mobile phone was verified by the State Food and Drug Administration in 2013 and has 8 functions including blood sugar detection, exercise management, diet management, drug management, diabetes treasure book, regular reminder, doctor consultation, and emergency help. Yinuo Mobile Health Management System integrates the entire process of "collection, analysis, guidance and management of health data of diabetic patients, transforming the management scale of traditional diabetes "points" into a "line" management model.

Currently, there are 114 million diabetic patients in my country and 148 million high-risk groups, most of which cannot be effectively controlled by blood sugar. Yinuo's hardware products are currently mainly used for severe vertical platforms for diabetes. The main equipment includes diabetic mobile phones, mobile phone blood sugar partners, smart mobile blood pressure monitors, and hardware devices for blood lipids, etc. The corresponding software currently has the Yinuotang Doctor app on the patient side, the Yinuo Doctor app on the doctor side, the patient communication community www.511health.com on the platform, the Yinuo Health Cloud Platform on the hospital side, and the Yinuo Doctor workstation on the hospital side.

, and Times Yinuo has an open mobile health management platform, which opens the development of various chronic disease applications APPS. Its light asset model is easy to expand rapidly and is compatible with wearable devices on the market. Its core operation team has rich experience and successful cases in the Internet, communications, medical devices and other industries, and can assist third-party apps and wearable device developers to quickly obtain relevant national certifications. Yinuo m-Health, as a health management platform developed by Time Yinuo, is committed to the prevention, monitoring and health management of chronic diseases (www.shidaiyinuo.com). Yinuo m-Health is not limited to a certain type of chronic disease, but is open to the public the development of APPS for various chronic diseases, and is compatible with most wearable devices on the market and provides ODM management services for external hardware equipment for various APPS.

As an emerging industry, Yinuo has received strong support from the state and local governments. At the same time, it has collaborated with mobile operators in many regions to develop 3G mobile terminals, adopting a comprehensive cooperation model of network sharing, channel sharing and site sharing. Most importantly, the project has also received strong support from many Grade A hospitals in China. Currently, more than 2,000 endocrine experts and clinicians across the country have participated in Yinuo's mobile management plan. Yinuo currently cooperates with 7 Grade A hospitals, including Beijing 301 Hospital, 305 Hospital, 306 Hospital, China-Japan Friendship Hospital and other well-known hospitals, and has mastered the most scarce medical resources in mobile health management earlier. Currently, Yinuo app has 380,000 users, of which about 220,000 registered users, and its daily activity is around 30,000. The company expects that the number of registered users will reach 1 million by the end of this year, the number of app downloads will reach 3 million, and the number of hospital partners is expected to expand to 15-20.

Shuanglu Pharmaceutical: Diabetes are well-researched drugs, and its layout of Internet medical chronic disease management is in line with the company's strategy.

This capital increase is conducive to Shuanglu Pharmaceutical's layout in the fields of mobile medical care and health management, enhances the company's strength in the field of chronic disease medical care, and can effectively combine the resources accumulated in the field of drug treatment to explore a new model of "treatment + service" diagnosis and treatment integration.

Shuanglu Pharmaceutical launched the traditional diabetes treatment drug metformin glibenclamide tablets as early as 2004. Although this product does not have an advantage at present, it is still the mainstream drug product for clinical treatment of diabetes. Faced with the huge diabetes market, Shuanglu Pharmaceutical has applied for the development of a number of advantageous competitive varieties in the diabetes field in recent years, and its competitiveness in the diabetes field will be greatly enhanced in the future.

In recent years, through independent research and development and cooperative research and development, more than ten products with outstanding competitive advantages in the field of diabetes treatment have been reserved. This investment can complement the company's advantages with Times Yinuo, build a platform for diabetes management, and at the same time obtain a more mature entrance to the mobile medical terminal, laying the cornerstone for subsequent development. In addition, it can also explore and accumulate experience for the company's other chronic disease management fields such as liver disease, cardiovascular and cerebrovascular diseases, etc. This investment is the company's entry point for exploring chronic disease management and Internet medical care, laying the foundation for future innovative profit models. The research and development of

GLP-1 analog and long-acting preparation is coming to an end: 1) Diapin, a patented variety jointly developed by the company and the University of Michigan in the United States, is a tripeptide analog. The company has the exclusive development and use rights of the compound in China. Compared with the currently used GLP-1 receptor agonists and human GLP-1 analogs, this compound can be administered orally, which is a breakthrough in the application of this type of drug and has a longer effect. After about one year of safety assessment test, it can be applied simultaneously in China and the United States. 2) Long-acting GLP-1 injection: The GLP-1-Fc fusion protein developed by the company is constructed by connecting natural GLP-1 (7-37) with human IgG4 antibody Fc tablets.By linking with the Fc fragment, the protein stability and half-life were greatly improved (half-life 4 days, which significantly improved compared with the half-life of GLP-1 receptor agonist (2-11h)), and the inter-protein fusion link was optimized, further ensuring protein activity and effect. At present, the molecule has been successfully constructed, and the cell culture and purification process has also been established. Preliminary pharmacodynamics shows that it can effectively reduce postprandial blood sugar and maintain blood sugar at a constant level. The system's preclinical evaluation is in progress.

develops insulin products to lay the foundation for combined medication: 1) Insulin aspart: the first insulin analog developed by the company, and is expected to apply for clinical application in the first half of next year.

2) Degu Insulin is a new ultra-long-acting basal insulin analogue of Novo Nordisk. It has better effect on lowering glycemic than insulin glargine and lasts longer. The two insulin varieties developed by

company complement each other in short-acting and ultra-long-acting, making sufficient varieties for future combination medications. They can not only develop bi-insulin varieties, but also combine them with the GLP-1 drugs they are developing, making sufficient preparations for subsequent market competition.

Two SGLT2 inhibitors have been declared clinically: 1) Canagliflozin was developed by its subsidiary Nanjing Cavendish, and has been declared clinically. This drug is the first SGLT2 inhibitor approved by the FDA and was approved in March 2013 to improve blood sugar control in adult patients with type 2 diabetes. 2) Dagliflozin was also developed by Cavendish and has been applied for clinical application. It is the second SGLT2 inhibitor approved by the FDA and is safe and effective in the treatment of type 2 diabetes.

High-efficiency DPP-4 inhibitor is to be submitted for production: The company is preparing to submit production of linagliptin as a type 2 diabetes treatment drug with a new mechanism of action. It was approved by the US FDA in May 2011. DPP-4 is a systemic protease. Researchers found that, in addition to the impermeable central nerve, linagliptin can be combined with DPP-4 in almost all organs in the body. The particularly long half-life means that the drug is lasting. It only needs to be given once a day to achieve the inhibitory effect of DPP-4. Unlike other DPP-4 inhibitors such as sitagliptin, vidragliptin and sagliptin, linagliptin is a very unique non-peptidomic DPP-4 inhibitor. This unique structure allows linagliptin to bind closely to DPP-4. It has been confirmed by many clinical trials that linagliptin can significantly control blood sugar, the incidence of side effects is comparable to that of placebo, and it has good safety, effectiveness and tolerance, and has great market potential. At present, this variety will be submitted for production within 2015.

Domestic imported products include Boehringer Ingelheim Pharmaceuticals (Ou Downing), and no similar products are available in the market in China. The indication approved by OuDongning Import Registration is "combined with metformin and sulfonylurea drugs, combined with dietary control and exercise, for blood sugar control in adult patients with type 2 diabetes (T2DM). This product can be used in combination with the company's existing product metformin glibenflexium.

blockbuster new drugs have entered the harvest period, building an Internet medical chronic disease management platform and new business layout adds space for future imagination and maintains "buy".

This time, the company's capital increase and stake in Tianjin Times Yinuo will help its layout in the fields of Internet medical care and health management, enhance the company's strength in the field of chronic disease medical care, and can effectively combine the resources accumulated in the field of drug treatment to explore a new model of "treatment + service" diagnosis and treatment integration. In recent years, through independent research and development and cooperative research and development, the company has reserved more than ten products with outstanding competitive advantages in the field of diabetes treatment. This investment can complement the advantages of the company and Times Yinuo, build a platform for diabetes health management, and obtain a more mature entrance to the mobile medical terminal, laying the foundation for subsequent development. In addition, it can also explore and accumulate experience for the company's other chronic disease management fields such as liver disease, cardiovascular and cerebrovascular diseases, etc. This investment is the company's entry point for exploring chronic disease management and Internet medical care, laying the foundation for future innovative profit models.

Zhongyuan Xiehe: Performance meets our expectations

Zhongyuan Xiehe 600645

Research institution: Founder Securities Analyst: Wu Bin Date of Writing: 2015-04-29

Event: Zhongyuan Xiehe Announcement of 2014 Annual Report and 2015 Quarterly Report.

Comments:

2014 performance meets our expectations. The company's revenue in 2014 was 477 million yuan, an increase of 32% year-on-year, and its shareholders' net profit was 35.46 million yuan, an increase of 392% year-on-year, with EPS 0.10 yuan, which meets our previous expectations and has also completed the equity incentive exercise requirements.There were non-recurring gains and losses in the first three quarters, but there were no more non-recurring gains and losses in the annual report. We have commented on the company's performance forecast in 20150106. It is estimated that the main reason is the loss of investing in stocks: at the end of the third quarter, the company held 4.4955 million shares of Huayi Electric and 3.53 million shares of Xinlun Technology, respectively. The stock prices of the two had fallen by 0.92 yuan (down 8.4%) and 5.26 yuan (down 24.7%) respectively in the fourth quarter of last year. Calculation shows that the stock investment loss in the fourth quarter was about 22.7 million yuan. No profit distribution.

stem cell storage business has grown steadily. In 2014, the storage business revenue was 360 million yuan, an increase of 27.4% year-on-year, and the gross profit margin increased by 3 percentage points, mainly through life bank cards to strengthen market promotion and price adjustments; among them, the number of stem cell storage parts increased by 12% year-on-year, of which the number of umbilical cord mesenchymal stem cell parts increased by 8.7%, and the number of hematopoietic stem cell parts increased by 19.3%, with steady growth.

The number of placental stem cells and adipose stem cells decreased, but the base of the two is small and the impact is not great. The revenue of the cell culture business was RMB 31.15 million, an increase of 70.5% year-on-year, and the revenue of the gene detection business (mainly high tumor risk, comprehensive immune assessment, etc.) was RMB 36.87 million, an increase of 30.9% year-on-year.

Revenue in the first quarter of 2015 increased by 72% year-on-year, mainly due to the consolidation of Zhicheng Biologics; net profit in the first quarter was 160 million yuan, mainly due to stock investment income of 65.83 million yuan and fair value changes of 83.47 million yuan. After excluding it, the net profit excluding non-operating items in the first quarter was 11.35 million yuan, an increase of 339% year-on-year.

is optimistic that the company will become a genetic technology integration platform. The repository built by the company for many years has become the company's core advantage: on the one hand, the company has laid out a repository nationwide and has a large number of cell resources. Whether it is for its own research or clinical use, these cell resources are a huge treasure house of the company; on the other hand, the years of operation in the stem cell field have enabled the company to establish a strong professional image in the field of cells and genes, providing a good foundation for future mergers and acquisitions and business expansion.

Currently, the industry of cell therapy, genetic testing, etc. is in a rapid development stage in China, and these industries have no integrators in China. In terms of policy, the National Health and Family Planning Commission will definitely implement supervision of these industries and the industry will be reshuffled. With the help of capital and listing platform, the company is most expected to become an integrated platform.

Risk warning: M&A is lower than expected; industry accidents lead to government rectification; stock market adjustment risks.

performance forecast and rating. We maintain the expected EPS deducting non-recurring items from 2015 to 2016 to be 0.38/0.81 yuan, respectively, and the EPS in 2017 is expected to be 1.03 yuan. The company's stock price has doubled since our in-depth report released in 20141211, and its valuation is not low. Considering that the company is a relatively scarce stem cell and genetic concept stock in A-shares, we maintain the recommended rating.