The performance in the first half of 2021 was slightly lower than we expected.
The company announced 1H21 results: revenue of HK $2.443 billion, year-on-year + 37.0%, month-on-month ratio 1.4%; return to the mother net profit of HK $276 million (corresponding to HK $0.09 per share), year-on-year + 11.6%, month-on-month ratio-24.1%, the profit end was slightly lower than expected, mainly due to the sudden epidemic in Shijiazhuang in the first half of 2021, the sharp decline in hospital visits, moxifloxacin and sodium chloride were collected, and large infusion exports fell.
Development trend
In the first half of 2021, sales of intravenous transfusions increased 31 per cent year-on-year to 632 million bags per bottle. In the first half of 2021, the sales revenue of non-PVC soft bags, vertical soft bags, polypropylene plastic bottles and glass bottles was + 26.6%, 76.3%, 21.5% and-3.2% respectively. In the first half of 2021, the unit price of the product was 2.4% to HK $2.42 year-on-year. In the first half of 2021, the average sales prices of non-PVC soft bag infusion, vertical bag infusion, PP plastic bottle infusion and glass bottle infusion products changed year-on-year-17.9%, + 6.6%, + 9.0%, + 5.7% to 3.62,2.11,1.46 and 2.96 Hong Kong dollars, respectively.
Sales of small water needles and APIs in Anbu increased by 66.1% and 147.0% compared with the same period last year. In the first half of 2002, the income of small water needles in Anbu was HK $488 million. In the first half of 2021, the income of APIs was HK $247 million, mainly due to the restorative growth of market demand at home and abroad.
Other: 1) in the first half of 2021, the company's gross profit margin was 60.2%, down 3.8 percentage points from the same period last year. The rate of sales expenses was 35.3%, down 2.3 percentage points from the same period last year. The rate of administrative expenses was 6.3%, down 1.4 percentage points from the same period last year. The rate of R & D expenditure was 5.5%, an increase of 2.7% over the same period last year. 2) the sample preparation of the company's first innovative drug category 1 new drug NP-01 project has been completed, and the company is expected to start a clinical trial study; 3) 2 varieties and 4 specifications of ambroxol hydrochloride injection and doxophylline injection won the bid in the fourth batch of national collection; fluconazole sodium chloride injection and ropivacaine hydrochloride injection won the bid in the fifth batch of national collection. As of the first half of 2021, the company has 6 varieties have been included in the collection.
Profit forecast and valuation
We maintain the 2021 / 2022 revenue forecast of HK $54.23 / 6.396 billion, corresponding to a growth rate of 27.3% and 18.0% respectively. However, due to the lower-than-expected gross profit and net profit in the first half of the year, we reduced our net profit in 2021 / 2022 by 33.7% to HK $790 million / HK $1.164 billion, year-on-year growth of 29.0% and 47.4%. The current share price corresponds to 19.4 times 2021 / 2022 / 13.2 times earnings.
Taking into account the gradual fading of the impact of the epidemic, we maintain an outperform industry rating and a target price of HK $5.80, corresponding to 22.2 times 2021 and 15.1 times 2022 earnings, which has 14.6% upside compared to the current stock price.
Risk
Sales of new products declined; collection results were lower than expected.