Shandong Pharmaceutical Glass: Leading cost pressure on pharmaceutical packaging materials can be eased

Release time: 2010-07-31

From January to September 2008, the company achieved operating income of 895 million yuan, an increase of 19.98% year-on-year; operating profit of 125 million yuan, an increase of 5.86% year-on-year; net profit attributable to the parent company of 98.84 million yuan, an increase of 14.73% year-on-year; realized basic earnings per share 0.38 yuan. Among them, from July to September, the company achieved operating income of 329 million yuan, an increase of 25.77% year-on-year, realized operating profit of 42.25 million yuan, an increase of 11.65% year-on-year, net profit attributable to the parent company of 32.48 million yuan, an increase of 9.3% year-on-year, and realized basic earnings per share 0.13 yuan.

Gross profit margin decreased by 2.22 percentage points, and the expense ratio remained stable during the period. The company's gross profit fell to 29.18% in the first three quarters of the year due to rising prices of energy, soda ash and butyl rubber, a year-on-year decrease of 2.22 percentage points. The gross profit margin in the third quarter was 28.16%, a year-on-year decrease of 2.4 percentage points and a decrease of 2.22 percentage points from the previous month. The company's expense ratio during the first three quarters was 14.09%, which was basically the same as last year. Among them, the sales expense ratio increased by 1.4 percentage points to 8.68%, and the management expense ratio decreased by 1.19 percentage points to 4.68%. The cost pressure is expected to ease. Among the company's glass product costs, coal accounts for about 17%, electricity accounts for about 7%, and heavy alkali accounts for about 12%. The cost of butyl rubber plugs accounts for about 70% of the cost of butyl rubber plugs. It is estimated that in 2009, coal prices will be affected by factors such as the macroeconomic downturn and there will be room for a 15% -20% decline. The price of soda ash soared and fell. With some of the capacity under construction put into production in 2009, there may be excess capacity and the price still has room for decline. Although the price of butyl rubber is currently maintained at a high level, the price of butyl rubber is expected to fall as the price of crude oil falls. It will decline, and the integration effect of the butyl rubber stopper industry has been reflected in 2008. The increase in industry concentration will help the company to improve profitability through scale advantages. At the same time, the company is also actively taking various energy-saving measures to reduce company costs.

Highlights of future performance. The medical reform brings the expansion of the general medicine market, and the company benefits as a downstream of the industry; the company put into operation a brown bottle with a capacity of 300 million in March this year. The company's total production capacity reached 1.1 billion. Brown bottles will continue to be one of the main sources of profit for the company in the future. The bottle is mainly used for export. The company said that the financial turmoil currently has little effect on the company's product exports; the mid-to-high-end pre-filled syringe project of the additional issuance project is expected to be put into operation in early 2009; the company's first-class glass products still need market cultivation, but the long-term prospects are broad.

  risk warning. Uncertainty in the development of the first-class glass market, the risk of cyclical fluctuations in raw material prices.

Earnings forecast and rating. We expect the company's EPS in 2008-10 to be 0.51 yuan, 0.65 yuan and 0.82 yuan, relative to the company's current stock price PE is 15 times, 12 times and 9 times, respectively. The decline will increase the company's profitability. In the long run, the company will rely on reinvestment to expand production scale and improve product quality to compete with foreign pharmaceutical packaging materials companies. As a leader in the pharmaceutical packaging materials industry, the company has been given an "overweight" rating for the first time.