Event
According to its 2008 performance express, the company reported sales income of Rmb309.861mn, operating profit of Rmb125.186mn, net profit of Rmb101.573mn, and EPS of Rmb0.73.
Our Analysis and Estimation
The company’s performance is in line with our expectation
Growth of plasm production still being key of its profit increase
Its plasm collection is to sustain steady growth
“90-day Quarantine Period” policy reduced 2008 plasm production quantity, while increased that of 2009
Growth of plasm production depends on that of plasm collection and steadiness of plasm contributor
Influence of wholesale & issuing system on production periodicity is weaker
Contradiction of supply & demand still sustains product price at high level
Periodic expenses still have downside space
Investment Suggestion
We predict CAGR of the company’s sales income and net profit in 2008-2011 to be 19.98% and 17.46%, and sales income to be Rmb39.9946mn, Rmb45.0753mn and 53.5181mn, and EPS to be Rmb0.84, Rmb0.93 and Rmb1.03. Given WACC=8.87%, g=3%, reasonable valuation is Rmb25.46, representing P/E ratio at 30.2x under DCF calculation. Supposing that the company gets tax payment preference, its EPS in 2009-2011 are Rmb0.90, Rmb1.02 and Rmb1.15; DCF valuation is Rmb28.89, representing 2009 P/E ratio at 32.1x.