Category: Money tips Release Date: 2005-12-24
Event Description
Pien Tze Huang's consultation with the overseas agents, decided February 1, 2007 onwards Pien Tze Huang export prices increase each and two U.S. dollars.
Event Comments
First, the main reason for adjusting the prices of raw materials prices and the appreciation of the renminbi Pien Tze Huang's products for export, overseas sales accounted for more than 50% of total sales. Pien Tze Huang are mainly exported to Indonesia and other Southeast Asian countries, to local Chinese as the main consumer. From the sales channels, end-to-consumer groups are relatively stable. If you do not take into account price changes, sales growth of around 5% a year. Since the reform on RMB appreciation of 5%, while the price of natural musk from the control period of 8-9 million / kg up to 13 yuan / kg. So the company decided to Pien Tze Huang export prices increase by 2 dollars each and 14.5 U.S. dollars, increase the range of 13.8%.
We note that the export price is always lower than that Pien Tze Huang in the markup, but every year there are about 20% of domestic products has been the flow of foreign tourists after purchase. Fact, the bargaining power of Pien Tze Huang on the downstream strong, its exports by Zhang Long Industrial Co., agents, commission agents in 2005 from 10% to 5%, but increases through the layers of overseas distributors, overseas retail prices generally higher than those of domestic even higher. In the domestic context, the ex-factory price and Zhangzhou Pien Tze Huang local retail price is almost the same, in the middle channels, profit margins have been compressed. However, in Beijing and other places, Pien Tze Huang retail price is much higher than ex-factory price, giving brokers leaving a larger profit margin. From a different perspective reflects the market Pien Tze Huang was not sensitive to price changes, the company has more room for price increases. In its announcement, the company also proposed to yuan appreciation and raw material prices according to changes in the camera to adjust ex-factory price. With this price adjustment of export prices, Pien Tze Huang price difference between export and domestic sales have not, we expect that in 2007 the company is likely to further increase domestic prices, so that the overall ex-factory price rose about 10%.
Second, the performance in 2007 had a positive impact on the current series of Pien Tze Huang was 72% of gross margin, assuming that other things being equal, the product price for every 5% increase in gross margins will increase 1.2 6 percentage points, or earnings per share 0.058 yuan. Prices expected to result in accumulation of drugs brokers and consumers to buy in advance, it is generally an increase in the sales price adjustment before the price adjustment will occur some time after the sales decline. If they are raised ex-factory prices become the norm, right will not have much impact on sales. We believe that the company's average price rises in 2007 may reach 10%, net of yuan appreciation and raw materials price rise factors, earnings per share impact of more than 0.05 yuan.
Third, to maintain "prudent Recommended" rating in 2005 after a continuous increase in prices in 2006, ahead of market dealers have Tunhuo digestion process. In addition, the company's investment in knitting machinery business in 2005 contributed to the company six million profit, while the 2006 changes in the market, coupled with the plant into the input period, which a profit would be significantly reduced. We forecast earnings per share in 2006 to 0.7 per. 2007 In addition to the factors in product prices, the company is worth looking forward to brewing the marketing reforms. Our products are mostly exported, the domestic has been a short board, sold 70 percent are concentrated in Fujian and Guangdong provinces. As people's living standards improve, we believe that Pien Tze Huang will be more areas of consumer awareness, thus becoming a new profit growth point. Our company's 2007 EPS forecast to reach 0.9 yuan. It is noteworthy that, at present there are only five companies of the four kinds of products can use the natural musk (Beijing Tong Ren Tang Group Angongniuhuang Pill, Shanghai Lei Yun Shang Pharmaceutical Co., Ltd. and Suzhou Lei Yun Shang Pharmaceutical Co., Ltd. Liushen , Xiamen, China Pharmaceutical Co., Ltd. Eight Dan, Zhangzhou Pien Tze Huang Pharmaceutical Co., Ltd. of Pien Tze Huang), the right to use the natural musk that several companies are monopolies, their prices and improve product sales has provided a guarantee, so We can be more generous valuation premium. Under the current pricing level of the brand of Chinese medicine, we think that may be given 35 times its 2007 price-earnings ratio, or target price is 32 yuan, to maintain "prudent recommended" rating.
