China Healthcare:Model revision for plasma names

类型：行业研究机构：德意志银行研究员：Jack Hu 日期：2017-12-22

Reimbursement control may add risk to volume growth.

    As we approach year end, more news flows emerged on reimbursement budgetcontrol which is largely inline with our previous expectation. That being said, weare slightly surprised that IVIG products, in addition to albumin, have been placedunder MDL (monitored drug list). We believe PDT industry could be at slightlylarger exposure vs. exclusive drugs on volume growth. We reduce our estimatesfor CBPO and Hualan accordingly.

    Model revision for CBPO.

    We revised down our estimates for CBPO from 4Q17 to 2020. We model 7%/7%growth for revenue / core profit in 4Q17 in RMB terms, representing change of-2%/-1% respectively vs. previous estimates. For 2018, we adjust revenue / coreprofit growth to 14%/15%, representing variance of -1%/-1% from prior estimates.

    The revision was mainly driven by lowering albumin and IVIG sales, which weproject to grow at CAGR of 4%/4%, respectively, from 2018 to 2020.

    Model revision for Hualan.

    We revised down our estimates for Hualan from 4Q17 to 2020. We model13%/-2% growth for revenue / core profit in 4Q17, representing change of-3%/-1% respectively from previous forecast. For 2018, we adjust revenue / coreprofit growth to 13%/14%, representing variance of -2/-5% from prior estimates.

    The revision was driven by lowering albumin and IVIG sales, which we project togrow at CAGR of 7%/11%, respectively, from 2018 to 2020.

    Valuation and risks.

    We lower our PT for CBPO to USD116 from USD130, based on 21x 2018E forwardEPS. We believe the multiple is justified, as the company’s global peers are tradingat 27x, with 14% EPS growth in 2019E vs. 12% for CBPO in RMB. Key risks includeM&A integration, price erosion, disruption in plasma collection, cost inflation anddelays in product launches.

    We lower our PT for Hualan to RMB24.7 from RMB26.0, based on 28x 2018E EPS.

    We believe 28x is justified, as A-share peers are trading at 29x with 27% growthin 2018E (vs. 14% we model for Hualan). Upside risk: smaller-than-expected ASPcuts; downside risks: cost inflation/ higher-than-expected ASP cuts.