康哲药业(0867.HK)：ASP pressure+concerns about the business model

机构：银河证券

Our analysis results indicate the following:

Optimistic case: When D+P volume increase >30%, together with upstream manufacturers’ lowering ex-factory prices by 20%, with 20% saving in selling expenses, the impact caused by a 40% ASP cut can be  largely offset. 

Worst case: If the Company does not accept an ASP cut and sacrifices secured volume, operating profit in 2019E may be revised down by ~14% (Figure 2 case 2).  

The best strategy for CMS is to accept the ASP cut, or in about two years when the GPO is executed nationwide, CMS’s earnings may be impacted by ~14%, which is even worse than the most bearish case in Scenario 1 (40% ASP cut with 10% volume increase). At least there is room for negotiation in the ASP cut case, as its upstream manufacturers may share the ASP pressure.