1-3Q21 performance meets our expectations
The company announced 1-3Q21 results: operating income of HK $3.922 billion, an increase of 31.9% over the same period last year; net profit of HK $506 million, corresponding to HK $0.17 per share, an increase of 20.6% over the same period last year, in line with our expectations.
Trend of development
In the first and third quarters of 2021, the RMB caliber of intravenous infusion sales increased by 18.7% compared with the same period last year. The sales volume of intravenous infusion increased by 21.0% to 982 million bags per bottle, the comprehensive average unit price of intravenous infusion decreased by 1.9% to 2.05 yuan compared with the same period last year, and the sales volume of intravenous infusion reached 2.01 billion yuan. Among them, the sales volume of non-PVC soft bags, vertical soft bags, polypropylene plastic bottles and glass bottles changed from + 38.2%, + 45.6%, + 5.1% and-11.7% to 339 million, 208 million, 379 million and 56 million bags per bottle, respectively, and their respective sales revenue changed from + 22.9%, + 46.8%, + 5.0% and-11.3% to 10.53,3.63,4.56 and 138 million yuan respectively. We believe that the increase in sales in the intravenous infusion sector is mainly due to the fact that the company continues to replace the market share of small manufacturers and increase the market concentration.
In the first and third quarters of 2021, the RMB caliber sales of ampoule injection and API increased by 25.4% and 92.5% respectively compared with the same period last year. The income of ampoule injection is 712 million yuan and that of raw material medicine is 303 million yuan.
Biofilm plate: 1) on May 27, the company announced that the "disposable liquid distribution system multi-layer co-extruded biofilm" developed by Jiangsu Bosheng, a wholly-owned subsidiary of Jiangsu Bosheng, has been put into production, and the product meets the relevant requirements of USP level 6 and international standards in the United States Pharmacopoeia. 2) on July 23, the company announced that Jiangsu Bosheng would cooperate with Shanghai Lechun Biotechnology Co., Ltd. in the field of biofilm, while Jiangsu Bosheng added a seven-layer biofilm production line with a width of 1.6 meters. 3) on October 18, the company announced that it was considering a spin-off of Jiangsu Bosheng and listing in mainland China.
Profit forecast and valuation
We keep our net profit per share forecasts for 2021 and 2022 unchanged at HK $0.26 (YoY 29.0%) and HK $0.38 (YoY 47.4%). The current share price corresponds to a price-to-earnings ratio of 14.9 / 10.1 in 2022. We maintain an outperform industry rating and a target price of HK $5.80, corresponding to 22.2 times 2021 price-to-earnings ratio and 15.1 times 2022 price-to-earnings ratio, which is 48.7% upside from the current share price.
Risk.
The sales of new products decreased; the collection results were lower than expected.