$合生元(01112)$ 美林的Tina，继续看空。
Raise estimates and PO; reiterate Underperform Biostime posted 69% lower earnings YoY in 2015, at RMB251mn, above the BofAML estimate and the company’s profit alert, driven by a RMB162mn forex gain in 4Q and better profitability for Swisse. We raise our 2016/17E by 19%/29% to factor in Swisse’s higher margin and a reduction in selling expenses, as Biostime is eager to get refinancing at a cost of its long-term brand equity. Our new PO is HK$21.8, or a 15x 2016E P/E. We reiterate our U/P rating, as we believe the 80% share-price rally YTD has more than priced in the earnings upside from Swisse, and the upcoming 1Q16 results, with a QoQ decline for Swisse, could be a negative catalyst. Our Income rating moves to “9” from “8”.Infant formula: Short-term gain and long-term painInfant formula (IMF) segment sales dropped by 22% in 2H, widening from 9% in 1H,suggesting weak sell-through. It also recorded a RMB153mn loss in 2H15, despite an improvement in gross margin, indicating a rise in selling expenses. In 2016, we note that Biostime could see a rise in segment profit, thanks to a 30% reduction in sales staff and a meaningful reduction in A&P, as well as the absence of one-off expenses. Hence, we expect Biostime to start losing market share, with sales declining in 2016-18E.Swisse: The growth engine, but expect QoQ decline in 1Q16 Swisse posted sales of RMB2.35bn in 2015, and we expect sales to rise 28% and exceed RMB3bn in 2016. Net margin in 4Q was 28.9%, or 24% post minority interests, higher than the 24% seen in FY15, due to leverage. We expect Swisse’ net margin to be 27% in 2016 and for it to contribute RMB677mn in earnings, barring finance and amortization expenses. We expect Biostime to post lower QoQ sales for the segment in 1Q16.Refinance to conclude soon, but net gearing at 123% Management indicated that the refinancing of its bridge loan (US$450mn) will beconcluded soon, and it is in the process of securing credit ratings in order to refinance the convertible bond (CB) before Feb-2017. The heavy debt led to a net gearing ratio of123% in 2015, and we expect the ratio to come down to 79% in 2016, still at a very high level, with annual interest costs of over RMB300mn, assuming a 5%+ interest rate