Pioneer Pharma (1345 HK) China Puti More rerating on the ...
Transcript of Pioneer Pharma (1345 HK) China Puti More rerating on the ...
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22 October 2014
Kenneth Li
(852) 2235 7619
Trading data
52-Week Range (HK$)
3 Mth Avg Daily Vol (m)
No of Shares (m)
Market Cap (HK$m)
Major Shareholders (%)
Auditors
Result Due
2.64/7.03
3.2
1333
8,880
Li. XZ (72.15%)
E&Y
FY14: March Company description
Pioneer is a leading and fast growing third-party
marketing, promotions and channel management
service provider in China for international
pharmaceutical and medical device suppliers with
9% national market share in 2012. Its products
portfolio consists of 32 pharmaceuticals and
medical devices for pain management,
cardiovascular, respiratory, immunology,
ophthalmology and other therapeutic areas.
Price chart
More rerating on the horizon Rating Buy New initiation
Target price HKD 8.90
Current price HKD 7.00 Upside +27%
A fast growing pharmaceutical and medical device service provider in China Pioneer is a leading and fast growing third-party marketing, promotions and channel management service provider in China for international pharmaceutical and medical device suppliers with 9% national market share in 2012. Its products portfolio consists of 32 pharmaceuticals and medical devices for pain management, cardiovascular, respiratory, immunology, ophthalmology and other therapeutic areas. Its net profit is forecast to grow by CAGR of 36% due to rising contribution of comprehensive marketing and promotion of pharmaceutical and medical device products and economy of scale.
Strong earning growth driven by new products and network expansion Pioneer’s strong earning growth to be driven by expansion of hospital coverage for pharmaceutical products such as Fluxum, Neoton, as well as sales recovery of Difene in FY15. Strong growth in medical equipment is due to network expansion of intraocular lens and WaveLight equipment as well as the launch of the new product NeutroPhase in FY15.
Strong and healthy growth in pharmaceutical and medical device promotion market in China The marketing, promotion and channel management service market to growth by 31.2% CAGR during 2013 to 2017 compared with 18.5% for the overall pharmaceutical market due to rising outsourcing of marketing and promotion activities, more small and medium size companies want to enter the lucrative Chinese pharmaceutical market as well as healthcare reforms and economic growth create more target markets for the overseas pharmaceutical companies
Initiate at BUY with target price HK$8.90 We believe Pioneer is interesting with strong organic growth of existing products, new launch of NeutroPhase in 2015 and possible M&A activities. We initiate Pioneer with BUY and target price of HK$8.90, based on 21.6x FY15 PE which is 10% discount to CMS due to short listing history. We believe delivering strong results continuously will lead to further rerating for the stock.
Rmb m (Dec-end) FY11A FY12A FY13A FY14E FY15E
Revenue 718 859 1,272 1,623 2,010
Operating profit 129 216 292 355 499
Net Profit 92 183 247 313 440
EPS (Rmb) - - 0.18 0.23 0.33
P/E (x) - - 30.7 24.2 17.3
Div yield (%) - - 1.9 2.1 2.9 Sources: Company, CIRL estimates
Pioneer Pharma (1345 HK)
China Puti
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A fast growing pharma and medical device service provider in China
Established in 1996 and listed in 2013, Pioneer is a leading and fast growing third-party
marketing, promotions and channel management service provider in China for
international pharmaceutical and medical device suppliers, with 9% national market
share in 2012. Pioneer’s current marketing products portfolio consists of 32
pharmaceuticals and medical devices for pain management, cardiovascular, respiratory,
immunology, ophthalmology and other therapeutic areas.
Pioneer’s business model is largely driven by demand from small to mid size overseas
pharmaceutical companies that do not have a sales force or do not have the capacity or
interest in managing its sales network in China due to cost and risk factors. Thus, a
service provider such as Pioneer with proven capabilities and strong track record of
offering one-stop solutions stands in front position to attract new suppliers.
Exhibit 1:Revenue forecast of Pioneer Exhibit 2: Product sold via comprehensive marketing in FY14
718
959
1273
1623
1996
0
500
1,000
1,500
2,000
2,500 Rmb m
25.2% CAGR
Difene, 16%
Fluxum, 19%
Polimod, 11%
Macmiror
Complex, 5%
Vinpocetine API,
10%
Neoton, 3%
Medical device
portfolio, 23%
Others, 13%
Source: Company, CIRL estimates Source: Company, CIRL estimates
Exhibit 3: Revenue breakdown for FY14 Exhibit 4: Gross profit breakdown for FY14
Products sold via
comprehensive
marketings, 45%Products sold via
the provision of
co-promotion
and channel
management,
55%
Products sold via
comprehensive
marketings, 76%
Products sold via
the provision of
co-promotion
and channel
management,
24%
Source: Company, CIRL Source: Company, CIRL
Pioneer’s marketing and promotions team consists of 240 in-house employees as well
as over 1,000 third-party promotions partners with 500 distributors such as Sinopharm,
Shanghai Pharma, Jointown and covering 26,000 hospitals and other medical
institutions and over 95,000 pharmacies across China in 1H14.
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Exhibit 5: Pioneer’s extensive channel coverage in China Exhibit 6: 3rd party pharma promotion in 2012 in China
7,644 10,398 14,076
23,000 26,000
49,411 52,471
79,004
87,000
95,000
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2010 2011 2012 2013 1H2014
Hospitals and medical institutions Pharmacies
CMS, 18.4%
Pioneer, 9.4%
Eddingpharm,
7.7%
NT Pharma,
5.0%Rxmidas, 4.1%
Others, 55.4%
Source: Company, CIRL Source: Company, CIRL
Pioneer provides two main services. These include 1) comprehensive marketing,
promotions and channel management service which we forecast to account for 45% of
sales but 76% of profit in FY14; and 2) channel management and co-promotion services
mainly for Alco’s ophthalmic pharmaceutical products in China since 1996, which we
forecast to account for 55% of sales but only 24% of total gross profit in FY14.
Exhibit 7: Business model of a 3rd
party pharma marketing, promotions and channel management service provider
Source: Company, CIRL
Difference between comprehensive promotions and co-promotion and channel
management
Pioneer provides comprehensive marketing, promotions and channel management
services to mid to small size international pharmaceutical and medical device suppliers
that wish to expand or channel the products in China. Comprehensive promotional
services include: 1) managing the product registration process for international supplier;
2) formulating marketing and promotional strategies for international suppliers; 3)
educating individual physicians on the clinical uses, benefits, side effects and other
clinical aspects of products, 4) organising academic conferences, seminars,
symposiums and other promotional activities; 5) appointing and managing third-party
promotional partners; and 6) providing channel management.
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Pioneer provides co-promotion and channel management services to Alcon. Pioneer
acts as the sole provider of channel management services for all of Alcon’s ophthalmic
pharmaceutical products sold in China, except for ophthalmic equipment, instruments,
consumables and contact solutions. For seven ophthalmic products, Pioneer provides a
co-promotion service that targets hospitals and pharmaceuticals that are not covered by
Alcon’s own marketing and promotions team.
Exhibit 8: Differences between comprehensive and co-promotion services provided by Pioneer
Comprehensive marketing, promotions and
channel management services
Co-promotion and channel management
services
Formulating marketing strategies Pioneer is responsible Supplier is responsible
Marketing and promotion people Pioneer’s sales force design marketing strategy
and execute sales activity
Pioneer’s sales force execute marketing and
promotion activities according to supplier’s
marketing strategy
Market coverage Nationwide or designated provinces based on
contract
Usually customers not covered by suppliers’ own
team
Marketing and promotion activities Academic promotion and sales force training Focus on hospital visit, supplier provides training
Product registration and renewal Provide upon request from supplier No registration service
Gross margin Higher than 50% Usually between 10-15%
Source: Company, CIRL
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Strong growth driven by new products and network expansion
Pioneer’s comprehensive marketing products portfolio consists of 32 pharmaceuticals
and medical devices for pain management, cardiovascular, respiratory, immunology,
ophthalmology and other therapeutic areas. We believe the growth drivers for Pioneer
include Neoton, Fluxum, Neutrophase and other medical devices
Possible nationwide distribution right of Neoton for Pioneer
Neoton is creatine phosphate sodium for injection and is manufactured by Alfa
Wassermann of Italy. Neoton is primarily used to treat ischemic heart diseases and
cardiomyopathy from various causes. Neoton is added during cardiac surgery to protect
cardiac muscles and is also used to treat metabolic disorders in myocardial ischemic
states. Neoton has been patented in Europe and the US.
China’s market for creatine phosphate sodium (the generic name for Neoton) grew at a
CAGR of 15% during 2010 to 2012 and has a market size of approximately RMB3b in
2012 according to Frost & Sullivan. Manufactured by Alfa Wassermann in Italy, Neoton
is the sixth best selling creatine phosphate sodium product in China, with approximately
4.1% market share in 2012.
Pioneer is currently a comprehensive marketer for Neoton on behalf of Alfa
Wassermann in 5 provinces in China as a sub-agent. However, as the current national
distributor fails to meet up to sales target due to lack of experience in promotion and
marketing, we believe Alfa Wassermann could transfer the national distribution rights of
Neoton to Pioneer in near future. We believe both parties could benefit from the deal as
Pioneer is an experienced promoter with strong track record and the deal could increase
market exposure of Pioneer greatly. It could also allow greater gross margin as the
product is directly imports from manufacturer. The company could also provide
nationwide channel management of Neoton for Alfa Wassermann after the deal.
Exhibit 9: Market share of Neoton in 2012 Exhibit 10: Sales forecast of Neoton
Jin Bo (BJ Lixiang
Pharma), 31%
Wei Jia Neng
(Qili Pharma),
24%
Nasidaxin
(Yinglian Bio),
24%
Lai Bo Tong (Bo
Lai Phama), 12%
Neoton (Alfa
Wasserman), 4%Others, 5%
4.8
16.3
23.0
36.8
0
5
10
15
20
25
30
35
40 Rmb m
50% CAGR
Source: Frost & Sullivan, CIRL Source: Company, CIRL estimates
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Deepening hospital coverage for Fluxum
Fluxum is parnaparin, a low molecular weight heparin product manufactured by Alfa
Wassermann of Italy. Fluxum is used in anticoagulant therapy for the prevention of
clotting in arterial and cardiac surgery. Fluxum is one of the fastest-acting heparin
products for the treatment and prophylaxis of deep-vein thrombosis.
The Chinese market for low molecular weight heparin grew at a CAGR of 24% from
2010 to 2012 and has a market size of approximately RMB1.3b in 2012 according to
Frost & Sullivan. Fluxum is the 4th best selling low molecular weight heparin product in
China, with a market share of approximately 8.0% in 2012. Pioneer is looking to
strengthen direct academic promotion in Class II hospitals in 2nd and 3rd tier cities.
Currently, Pioneer has 800 hospitals coverage and management targets to add more
than 100 hospitals coverage this year.
Exhibit 11: Market share of low molecular weight heparin in 2012 Exhibit 12: Sales forecast of Fluxum
Fraxiparine
(GSK), 30%
Wanmaishu (CS
Bio), 26%
Clexane (Sanofi-
Avenis), 15%
Fluxum (Alfa
Wassermann),
8%
Li Mai Qing
(Zhaoke
Pharma), 6%
Others, 15%
61.7
84.9
136.0
190.4
0
20
40
60
80
100
120
140
160
180
200 Rmb m
50% CAGR
Source: Frost & Sullivan, CIRL Source: Company, CIRL estimates
Sales recovery in Difene
Difene is a diclofenac sodium dual-release capsule, manufactured by Temmler Werke in
Germany. It is used to treat arthritis and other inflammatory rheumatic diseases of the
spine, pain related to degenerative diseases of joints and the spine, trauma and
post-operative swelling and post-operative pain caused by surgery. It has unique
dual-release formulation patented. The product has 14% market share in China for low
molecular weight heparin in 2012.
The product has suffered from rectification activity to curtail goods fleeing cross different
provinces. However, the problem has been solved with the change of distributors. With
the completion of the rectification activity, we expected the product to grow by 2% yoy in
FY14 and 15% yoy in FY15.
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Exhibit 13: Market share of low molecular weight heparin in 2012 Exhibit 14: Sales forecast of Fluxum
Yingtaiqing
(Simere), 19%
Difene (Temmler
Werke), 14%
Votalin
(Novartis), 14%Diclac (Sandoz),
5%
Voren (Yung
Shin), 1%
Others, 47%
94.4
118.5 121.0
139.0
0
20
40
60
80
100
120
140
160 Rmb m
8% CAGR
Source: Frost & Sullivan, CIRL Source: Company, CIRL estimates
Launch of new product NeutroPhase in 2015
Pioneer’s highly anticipated new product NeutroPhase, a skin and wound cleanser, has
obtained approval from the CFDA for the launch of the product in China. The marketing
and distribution agreement also includes the Greater China region and South East Asia.
NeutroPhase is manufactured by NovaBay. It is a skin and wound cleanser consisting of
0.01% pure hypochlorous acid in physiological saline solution. NeutroPhase is intended
to be used to moisturise absorbable surgical dressing, wash and clean small wounds,
minor burns as well as acute and chronic skin lesions, such as diabetic foot ulcers and
post-operative wounds. In addition, NeutroPhase has been used to cure the life
threatening flesh eating disease. Moreover, according to Journal Advances in Skin &
Wound Care, NeutroPhase has the fastest bactericidal activity less than 1 minute at
concentrations that are safe for human cells. We expect the product has end-market
potential of estimated of Rmb5b in China alone.
Pioneer is currently promotion the products with hospitals and we expect atleast
Rmb30m sales of NeutroPhase for its initial year of launch in 2015.
Strong growth in other medical equipments
Pioneer has launched an intraocular lens equipment for the treatment of cataract this
year. We expect this product to achieve RMB50m revenue in its first year of launch in
FY14 and atleast 30% yoy growth for FY15. In addition, WaveLight, the fastest refractive
surgery platform from the US has coverage in 20 hospitals and management is looking
to add more hospitals coverage this year. We expect Rmb100m sales for WaveLight
before growing 50% yoy to Rmb150m in sales in FY15.
Planning to go downstream on Vinpocetine
Pioneer acquired 24% equity interest in Covexin May this year. Spain-based Covex is
the manufacturer of API for Vinpocetine for improving blood supply to the brain,
inhibiting platelet aggregation, reducing blood viscosity, enhancing the deformability of
red blood cells, improving blood fluidity and microcirculation. The API in China mainly
relies on imports and Covex is one of the main suppliers. Pioneer is looking for ways to
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expand this product by going downstream into making Vinopocetine end products.
Exhibit 15: Market share of creatine phosphate products in 2012 Exhibit 16: Sales forecast of medical device
32
93
171
245
0
50
100
150
200
250
300 Rmb m
62% CAGR
Source: Pioneer, CIRL Source: Company, CIRL estimates
Exhibit 17: Pioneer’s comprehensive marketing products
Source: Pioneer, CIRL
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New products in the pipeline
Pioneer has three drugs submitted for CFDA registration, which are for the treatment of
depressive disorders, schizophrenia and manic episodes of bipolar disorder, and
epilepsy. The company also has one medical equipment product called CollaGuard,
which is used for prevention of postoperative adhesions patients undergoing surgeries.
The products are expected to be launched in 2016/17.
Exhibit 18: New products in the pipeline
Source:.Pioneer, CIRL
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Strong and healthy growth in pharmaceutical promotions in China
With a fifth of the world’s population, China’s per capita healthcare expenditure, despite
growing at a CAGR of 26.3% from 2008 to 2011, remains relatively low. China’s per
capita healthcare expenditure was US$284 in 2011, compared to developing nation like
Brazil with US$768 and its neighbour Japan with US$3,161. China’s total healthcare
expenditure only accounted for 5.2% of its GDP in 2011, compared to 11.6% for France
and 17.9% for the US. Healthcare expenditure in China recorded CAGR of 18.8%
between 2008-2012 with 18.8% CAGR due to rising Government expenditure and
disposable income. China’s total healthcare expenditure is expected to grow at CAGR
of 12.5% during 2013 - 2017 to Rmb5,367b according to Frost & Sullivan.
Exhibit 19: Per capita healthcare expenditure Exhibit 20: Total healthcare expenditure in China
8627
5782
4958 48954291
3630 34373010
1163
284
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000 US$
1,454 1,754
1,998 2,436
2,891 3,351
3,763
4,290
4,792
5,367
0
1,000
2,000
3,000
4,000
5,000
6,000 Rmb b
18.8% CAGR
12.5% CAGR
Source: Frost & Sullivan, CIRL Source: Frost & Sullivan, CIRL
Third-party pharmaceutical marketing, promotions and channel management service
industry is a highly specialized industry in China. This market growth has significantly
outpaced the overall pharmaceutical market. China’s pharmaceutical market recorded
CAGR 25.4% in during 2008 to 2012 and generated sales of Rmb845b in 2012. In
comparison, the third-party services market recorded a CAGR 40.1% during 2008 to
2012 with sales reached Rmb9.7b in 2012. Although market size of third party
promotion only accounted for 1% of the overall pharmaceutical market in 2012, the
growth rate has been much faster.
Frost & Sullivan forecasts the marketing, promotions and channel management service
market to record a CAGR of 31.2% during 2013 to 2017 compared with 18.5% for the
overall pharmaceutical market in the same period. Strong growth of third party marking
is due to greater outsourcing of marketing and sales of more products to third party
promoters. Many small and medium sized overseas pharmaceutical companies have
not reached critical scale in China and lack the capability to build their in-house
marketing team and ongoing healthcare reforms and rapid economic growth in China
creates new target markets for foreign players.
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Exhibit 21: China pharma market size Exhibit 22: China pharma marketing, promotion service market
342 447
558 681
845 1,022
1,216
1,447
1,708
2,015
0
500
1,000
1,500
2,000
2,500
RMB B
25.4% CAGR
18.5% CAGR
2,509 4,054
5,611 7,764
9,654
12,647
16,567
21,868
28,866
37,526
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
RMB M
40.1% CAGR
31.2% CAGR
Source: Frost & Sullivan, CIRL Source: Frost & Sullivan, CIRL
Imported pharmaceutical market in China is expected to grow by CAGR 21.1% from
2013-2017 to Rmb159.6b in 2017. Growth for imported pharmaceutical market is
expected to outpace overall pharmaceutical market in China as imported products are
generally perceived to be high quality and increasing purchasing power of the PRC
population led to more greater purchase imported pharmaceuticals. In additional
imported pharmaceutical products manufactured by small and medium sized
pharmaceutical companies is expected to outpaced the imported products
manufactured by large sized pharmaceutical companies.
Exhibit 23: Imported pharma by large-sized companies in China Exhibit 24: Imported pharma by mid to small -sized companies
15 18
21 25
33 40
48
58
70
84
0
10
20
30
40
50
60
70
80
90
100
RMB BRMB B
22.2% CAGR
20.5% CAGR
12 15 19
24 28
34
42
51
62
75
0
10
20
30
40
50
60
70
80
90
100
RMB B
22.8% CAGR
21.9% CAGR
Source: Frost & Sullivan, CIRL Source: Frost & Sullivan, CIRL
According to Frost & Sullivan Report, the Chinese medical device market grew from
Rmb90b in 2008 to Rmb222 in 2012, or CAGR of 25.4%. It is estimated that the market
will grow to Rmb610b in 2017 with CAGR of 22.4% from 2013 to 2017.
Imported medical device market in China is expected to grow by CAGR 20.5% from
2013-2017 to Rmb177b in 2017. Growth for imported pharmaceutical market is
expected to outpace overall pharmaceutical market in China due to increasing chronic
disease, increasing demand for high-end medical services and advanced medical
therapies as well as increasing affordability. In additional imported pharmaceutical
products manufactured by small and medium sized pharmaceutical companies is
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expected to outpaced the imported products manufactured by large sized
pharmaceutical companies.
Exhibit 25: Imported medical device by large companies in China Exhibit 26: Imported medical device by mid to small companies
20 25
31 37
42 48
57
67
80
96
0
10
20
30
40
50
60
70
80
90
100
RMB B
20.8% CAGR
18.8% CAGR
11 15
19 24
30 36
43
54
66
81
0
10
20
30
40
50
60
70
80
90
100
RMB B
27.2% CAGR
22.6% CAGR
Source: Frost & Sullivan, CIRL Source: Frost & Sullivan, CIRL
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Financial analysis and valuation
We forecast revenue growth to be driven by comprehensive marketing products
sold due to deepening hospital coverage and new products. We forecast total
revenue growth of 28% yoy in FY14 and 24% yoy in FY15. In particular, we forecast
products sold via comprehensive marketing to grow by 51%/37% for FY14/FY15 due to
deepening hospital coverage and new products. We forecast products sold via the
provision of co-promotion and channel management to grow at 13% for FY14/FY15 due
to stable growth for Alcon’s products.
Gross margin to be stable. We forecast overall gross margin to trend up from 30.4%
in FY13 to 33.5%/35.0% for FY14/FY15. This is due to rising contribution from higher
margin products from comprehensive marketing compared to products from
co-promotion.
Rise in net profit. We expect net profit to reach HK$313m in FY14, representing net
profit growth of 27% yoy. We forecast net profit to grow by 40% yoy to HK$40m in FY15
due to rising comprehensive marketing with higher gross margin and economy of scale
effect.
We initiate Pioneer with BUY at 21.6x FY15 PE, target price HK$8.90. We initiate
Pioneer with BUY and target price of HK$8.90, based on 21.6x FY15 PE which is 10%
discount to CMS due to short listing history.
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Exhibit 27: Peers comparison
Source: Bloomberg, CIRL
Exhibit 28: Financial summary
Source: Bloomberg, CIRL estimates
Bloomberg Mkt Cap PER (x) P/B (x)
code (HKD mn) FY13A FY14E FY15E FY13A FY14E FY15E
HK LISTED MID/LARGE CAP PHARMA PEERS
CHINA MEDICAL SY 867 HK 32,309 40.5 29.8 24.1 9.3 8.0 6.7
TONG REN TANG-H 1666 HK 13,423 25.6 23.1 19.7 5.1 2.9 3.0
SINO BIOPHARM 1177 HK 37,259 35.9 28.9 24.9 8.1 6.3 5.1
SIHUAN PHARM 460 HK 63,843 38.8 28.8 23.3 7.2 6.5 5.5
CSPC PHARMACEUTI 1093 HK 38,579 37.3 28.9 22.4 2.7 3.9 4.5
TONG REN TANG-H 1666 HK 13,423 25.6 23.1 19.7 5.1 2.9 3.0
Average 33,139 33.9 27.1 22.4 6.3 5.1 4.6
CHINA PIONEER PH 1345 HK 9,480 24.5 24.1 18.0 5.0 4.2 5.8
Income statement Cash flow
Year to Dec (Rmb mn) FY11A FY12A FY13A FY14E FY15E Year to Dec (Rmb mn) FY11A FY12A FY13A FY14E FY15E
Revenue 718 959 1,272 1,623 2,010 Pre-tax profit 123 207 272 361 511
Gross profit (reported) 196 307 387 530 706 Taxes paid (20) (29) (29) (45) (66)
EBITDA 131 219 295 371 528 Depreciation 2 2 2 15 29
Depreciation (2) (2) (2) (15) (29) Associates 2 3 4 5 6
EBIT 129 216 292 355 499 CFO bef. WC change 131 219 287 365 528
Net interest income (exp.) 0 0 0 22 23 Change in working cap (127) (58) (197) (100) (114)
Associates 0 0 (7) (6) 0 Cashflow from operation 3 161 90 264 414
Exceptionals/others 0 0 0 0 0 CAPEX (2) (1) (16) (120) (120)
Profit before tax 123 207 272 361 511 Free cash flow 2 160 74 144 294
Tax expenses (26) (21) (37) (45) (66) Dividends (90) (148) (137) (157) (220)
Minority interest (1) 1 3 (3) (4) Balance sheet adj. 2 3 4 5 6
Adjusted net profit 92 183 247 313 440 Sharse issued 0 0 1,098 0 0
Dividends 0 0 143 157 220 Others 2 3 4 5 6
Net cash flow (63) 8 642 (45) 19
Balance sheet Net cash (debt) start 114 51 60 702 657
Year to Dec (Rmb mn) FY11A FY12A FY13A FY14E FY15E Net cash (debt) at year-end 52 60 701 657 676
Cash & equiv 346 366 1,006 961 980
Trade receivables 167 200 331 422 523 Ratios
Other receivables 0 1 5 5 5 Year to Dec (Rmb mn) FY11A FY12A FY13A FY14E FY15E
Inventories 243 296 420 514 613 Growth rate (%)
Other current assets 2 4 80 80 80 Revenue 33.6 32.7 27.6 23.8
Fixed assets 12 11 17 122 213 EBITDA 67.1 34.5 25.8 42.3
Intangible assets 3 16 15 15 15 EBIT 68.2 35.1 21.6 40.4
Investment, associates etc 15 34 122 122 122 Adjusted net profit 99.1 35.1 26.8 40.6
Total assets 788 929 1,997 2,241 2,551 Fully diluted EPS 99.1 35.1 26.8 40.6
Margins (%)
Account payables 242 291 361 445 531 Gross margin (reported) 27.3 32.0 30.4 33.5 35.0
Other payables 0 0 0 0 0 EBITDA 18.3 22.9 23.2 22.8 26.3
Short-term debt 338 416 430 430 430 EBIT 17.9 22.6 23.0 21.9 24.8
Other current liabs 15 9 15 15 15 Net margin 13.3 19.4 18.7 19.3 21.9
Long-term debts 0 0 34 34 34 Other ratios
Deferred tax and others 0 0 8 8 8 ROE (%) 49.8 87.9 20.6 23.8 28.5
Other long-term liabs 0 0 (8) (8) (8) ROA (%) 12.1 20.1 11.9 14.0 17.3
Total liabilities 594 716 840 924 1,010 Net gearing (%) 152.0 162.6 (23.5) (17.3) (16.0)
Interest coverage (x) 23.4 22.9 23.1 35.5 45.4
Share capital 0 0 82 157 220 Receivables days 74.0 69.9 76.2 84.7 85.8
Reserves 192 212 1,076 1,161 1,322 Payables days 143.8 149.1 134.3 134.6 136.6
Shareholders' equity 192 212 1,158 1,317 1,542 Inventory days 123.1 150.7 147.5 155.9 157.7
Minorities 1 1 (0) (0) (0) Effective tax rate (%) 21.2 10.2 13.5 12.5 13.0
Total equity 193 213 1,157 1,317 1,542
Net cash (debt) (292) (345) 273 227 247
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Risk factors
New product risk
Demand for new products such as Neutrophase might fails to meet expectation.
Government price intervention risk
The government sets the maximum retail price for pharmaceutical products in China,
possible price could affect Pioneer’s topline growth.
Contract renewal risk
The duration of contracts last from 1-10 years, failure to renew contract could affect the
company’s revenue for profit.
Page 16 of 16
Rating Policy
Rating Definition
Stock Rating Buy Outperform HSI by 15%
Neutral Between -15% ~ 15% of the HSI
Sell Underperform HSI by -15%
Sector Rating Accumulate Outperform HSI by 10%
Neutral Between -10% ~ 10% of the HSI
Reduce Underperform HSI by -10%
Analysts List
Antony Cheng Research Director (852) 2235 7127 [email protected]
Hayman Chiu Senior Research Analyst (852) 2235 7677 [email protected] Kenneth Li Senior Research Analyst (852) 2235 7619 [email protected]
Lewis Pang Senior Research Analyst (852) 2235 7847 [email protected] Susanna Chui Research Analyst (852) 2235 7131 [email protected]
Analyst Certification
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subject company or companies and its or their securities. I also certify that no part of my compensation was / were, is /
are or will be directly or indirectly, related to the specific recommendations or views expressed in this report / note.
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