Events:
Fuxiang Pharmaceutical issued an announcement: in the first half of 2021, the company achieved revenue of 776 million yuan, down 4.97% from the same period last year, and net profit of 152 million yuan, down 31.67% from the same period last year.
Main points of investment:
Affected by the increase in the price of raw materials and the reduction in the price of products, the semi-annual report performance has declined compared with the same period last From the perspective of the company's performance, Q2 achieved a profit of 78 million yuan in a single quarter, down 44% from the same period last year, mainly due to (1) the price of raw material 6-APA continued to rise in the first half of the year, rising as high as 260 yuan / kg, and the main product sulbactam fell to a low in recent years due to demand, falling as low as 400 yuan / kg. (2) affected by factors such as COVID-19 's epidemic shipment and inventory, last year's Q2 was the highest for the whole year, affecting the apparent growth rate of Q2 this year.
The price rebound of sulbactam superimposed the landing of new capacity to ensure high growth in the future. Since the third quarter, the price of sulbactam has rebounded, and profitability is expected to improve gradually. in addition, the company's capacity to put into production has been gradually released, tazobactam production capacity has been further expanded, 616t Nawei intermediate capacity has been completed for trial production, 600t 4-AA and 200t meropenem production capacity is also under construction, effectively ensuring the rapid growth of future performance.
CDMO opens up room for long-term growth, and the joint venture ensures the smooth retention of the project. The company established Lingfu Pharmaceutical Research Institute in a joint venture with Shanghai Lingkai (49% stake) and officially entered the field of CDMO. At present, there are 7 products under research, including dicarbamide, whose indications include pemphigus, idiopathic thrombocytopenic purpura, ascites, imaging diagnosis of Alzheimer's disease, chronic kidney disease and coronary artery disease. In the future, with the smooth progress of the product progress, it will usher in rapid growth.
Profit forecast and investment rating: we expect EPS to be 0.81,1.02 and 1.23 yuan respectively in 2021-2023, corresponding to PE 14.90,11.83,9.81times, we believe that the company's core products are expected to resume rapid growth, new capacity and new projects continue to be put into production, laying the foundation for rapid growth in the future, and the deep cooperation with CDMO adds new impetus to the company's growth, and still maintains the "buy" rating.
Risk tips: API prices fall, new production capacity is not as expected, and other systemic risks.