Yunnan Baiyao (000538): New Board Announcement List Announces Amendment to Articles of Association Reveals Internationalization

Yunnan Baiyao (000538): New Board Announcement List Announces Amendment to Articles of Association Reveals Internationalization

The event elected candidates for the ninth session of the board of directors and amended the articles of association. On the evening of August 5, the company issued an announcement of the resolutions of the fourth meeting of the eighth board of directors. The meeting passed the resolution: 1) “Proposal on Amending the Articles of Association” and agreed to submit to shareholdersThe General Assembly; 2) “Election of Non-Independent Director Candidates for the Election of the Ninth Board of Directors”, agreed to submit to the shareholders’ general meeting for resolutions; 3) “On the Voting of the Independent Director Candidates for the Ninth Board of Directors’ general elections,” agreed to be submitted to the shareholders’ general meetingAchieved; 4) “Practice on Requesting to Join the Second Extraordinary General Meeting of Shareholders in 2019”.

A brief comment on the reasonable composition of the new board of directors, and the nomination candidates for the ninth board of directors of the company ‘s long-term healthy development baseline are: 1) Non-independent directors: Chen Fashu, Chen Yihui, Wang Rong, Na Pengjie, Li Shuangyou, Wang Minghui, Yang Changhong; 2)Independent directors: Yin Xiaobing, Dai Yang, Zhang Yongliang.

We believe that according to the background of the candidate, the non-independent directors of the board of directors are composed of 2 Xinhuadu, 2 from SASAC of Yunnan Province, 2 from Yunnan Baiyao, and 1 from Hehe Group. The members of the board have a strong background and a reasonable composition.Laid a good foundation for healthy development.

Amend the company’s articles of association to highlight the internationalization. The company’s revised articles of association are as follows: The board of directors consists of 11 directors, with 1 chairman, 1 co-chairman, and 1 vice chairman.

In the setting of senior officials, the new articles of association stipulate that the company establishes the chief executive officer as the core senior management personnel. Other senior management personnel include senior vice presidents, vice presidents, chief chief officers, and secretary to the board of directors.

We believe that: 1) The establishment of co-chairs, chief executive officers, and chief function officers, the merger reflects the company ‘s mixed reform, the Yunnan State-owned Assets Supervision and Administration Commission and Xinhua Capital tied for the first largest shareholder, without the actual controller of the governance structure, the other side reflectsThe new governance mechanism is more international; 2) The company has amended the title of the articles of association, with 1 abstention, without any defects, and it is expected to have no significant impact on future progress.

We are optimistic about the company’s long-term healthy development. In the first half of 2019, we expect: 1) the pharmaceutical business unit is still working on channel adjustments, with short-term pressure, and is expected to usher in recoverable growth in the long term; 2) the health product business unit is operating healthy and is expected to achieveSteady growth; 3) The Chinese Medicine Resources Division may be slightly affected by changes in the prices of Chinese medicinal materials; 4) Provincial pharmaceutical companies continue to deeply cultivate the market in Yunnan Province to increase the city’s market share and achieve sustained growth.

In the short term, the company’s merger plan has been implemented, and the share repurchase (used for subsequent employee shareholding plans) is steadily advancing. It is gradually embarking on a new path. In the future, after the channel adjustment of the Pharmaceutical Business Department is expected to usher in a resumed growth;Judging from the implementation of major asset reorganizations, the company has injected new vitality, brought about continuous improvement of the incentive mechanism and the possibility of outsourcing M & A, and opened a new chapter in the development of the company.

Earnings forecast and investment rating We expect the company to achieve operating income of 298 in 2019-2021.

4.4 billion, 333.

59 ppm and 373.

06 billion, net profit attributable to mothers was 36.

5.6 billion, 40.

3.7 billion and 44.

520,000 yuan, an increase of 10 each year.

6%, 10.

4% and 10.

3%, equivalent to 3 respectively.

51 yuan / share, 3.

88 yuan / share and 4.

27 yuan / share, corresponding PE is 24.

5X, 22.

2X and 20.

1x, maintain BUY rating.

Risks prompt fierce competition in the consumer goods industry; new shareholders and management team run in 杭州夜网论坛 longer than market expectations; outbound M & A progress and intensity are difficult to predict;