Main points of investment
Event: the company issued the 2021 interim results announcement, 2021H1 achieved revenue of 1.907 billion yuan (+ 80.9%), the profit attributable to shareholders of continuing business is about 611 million yuan (+ 258.6%).
The net cash flow of business activities is 615 million yuan. Revenue, net profit growth are faster than we expected, mainly due to the smooth expansion of the medical sector and the rapid growth of traditional generic medicine business. (note: the growth rate in parentheses of the full text is the same as the same period of last year unless otherwise specified).
Sihuan Medical Beauty and Biopharmaceutical two-wheel drive, business performance has increased significantly. 2021H1, the company's overall revenue reached 1.907 billion yuan (+ 80.9%), mainly due to the substantial increase in revenue from Botox products Letibao and generic drugs in non-key monitoring catalogues. According to the company's performance report, the proportion of revenue of medical and beauty products, generic drugs in non-key monitoring catalogue, generic drugs in key monitoring catalogue, API and CDMO are 13.5%, 62.5%, 16.7% and 7.3%, respectively. In terms of business and products, 1) the income of medical and beauty products was 258 million yuan, compared with 29.6 million yuan in the same period last year. Among them, Letibao is the main contribution, commercial sales of 20 million bottles. 2) the revenue of generic drugs reached 1.51 billion yuan, an increase of 67.9% over the same period last year, of which the revenue of non-key monitoring catalogue products was 1.191 billion yuan, an increase of 122% over the same period last year, and the income of key products such as nicotinamide for injection, HuiNeng, Shucheng and other products achieved rapid volume growth.
The revenue of key monitoring catalogue products is about 319 million yuan, down about 12% from the same period last year. 3) the income of API and CDMO products is about 140 million yuan, which is a single-digit growth compared with the previous year.
Letibao Botox was released rapidly in the first half of the year, and the sales results were beautiful. The 100U and 50U botulinum toxin represented by the company were approved in October 2016 and January 2021 respectively. Among them, 100U Letibao was officially put on the market in China in February 2021, with the advantages of high quality and high performance-to-price ratio. It occupied the first place in the Korean market from 2020 to 2020, and was quickly released into hospital as the fourth botulinum product approved in China. As of July 31, 2021, Letibao has more than 40 agents and a marketing team of more than 60 people, covering more than 200 cities in China at a high speed with the agent model; Letibao has covered 1800 + medical institutions, of which Top 500 institutions have covered nearly 400. the company aims to cover 3000 + medical and beauty terminal institutions by the end of 2021.
With the overall layout of the medical and beauty business, the traditional generic drugs are expected to stabilize and improve. Medical and beauty business is not only the focus of future development, but also one of the main sources of profit increment. Relying on the "beauty space" of the medical beauty platform, the company has built a product pipeline mainly for injection products, covering all categories of medical beauty products, including injections, catgut embedding and instruments.
According to the company's performance report, in addition to the rapid release of Botox during the year, the company's agent Hugel hyaluronic acid is expected to be approved in 2021, self-research "child face needle" has entered the clinical stage, "young girl needle" is also in the animal trial stage, agent line carving and medical instruments are also being promoted, the comprehensive layout of medical and beauty products is expected to continue to make efforts. In terms of traditional generic drugs, category adjustment has been actively implemented since 2020, and the proportion of non-key monitoring has reached 79% in the first half of the year. New products such as powder double-chamber bags will be put on the market in the second half of the year, and Klinao's indications are expected to return gradually through health insurance negotiations at the end of this year. The traditional business of generic drugs has stabilized and improved as a whole.
Profit forecast and valuation level: the company rapidly released its botulinum toxin products, and the generic drug business stabilized and improved, but taking into account the continued increase in R & D investment and the continuous growth of sales expenses, we adjusted the company's 2021-2023 net profit to 1.0232qqqq1832 billion, corresponding to the current market capitalization, which is respectively times as much as in 17-13-10. Maintain a "buy" rating.
Risk tips: the promotion of medical beauty is not as expected, drug research and development is not as expected, the impact of medical policy, the impact of intensified market competition.