The company issued its 2008 annual report, according to which it realized business turnover of Rmb4911mn (+15.81% yoy), total profit of Rmb408mn (+182.91% yoy), net profit attributable to parent of Rmb269mn (+344.50% yoy), and EPS of Rmb0.26. It planned no profit distribution proposal in 2008.
We maintain its 2009-2010E EPS to be Rmb0.30 and Rmb0.35, representing P/E ratio at 31x and 26x based on closing price of Rmb9.33 on April 10, 2009. “Overweight” rating is temporarily maintained.
Potential risks: Commonly-used drugs might face an overall decline during the medical reform process, thus the company’s profitability might be influenced; uncertainties of cooperation with DSM still exist; suffocation of non-public issuance; short-term debt is excessive, and liability ratio is rather high, which might cause financial risks; systematic risks of the big-cap.