1-3Q21 sales are mediocre, reiterate "buy", target price HK $5.59 Stone four drugs 1-3Q21 revenue HK $3.92 billion (year-on-year increase of 32%, of which 3Q revenue also increased by 24%, mainly due to the rebound of 3Q20 base and weak export sales); net profit was HK $506 million (up 21% year-on-year), the growth rate was lower than the main reason for revenue: 1) confirm employee incentive fees of HK $6700. 2) strengthening the promotion of small water needles leads to higher sales costs. Despite the rapid growth of API / ampoule bottles, considering the slow recovery of grass-roots outpatients, we expect that transfusion sales will be flat in 21 years, and the forecast EPS for 21-23 will be reduced to HK $0.30 (former value: HK $0.37) and target price (HK $5.59). The target price is HK $5.59, which is consistent with the average value of domestic counterparts (previous target price: HK $6.66). The target price is HK $5.59, and the target price is HK $5.59, which is consistent with the average value of domestic counterparts (previous target price: HK $6.66). Corresponding to 18 times the 21-year forecast PE). Keep buying.
The performance of large infusion plate is stable, and therapeutic infusion is expected to release volume.
The company's 1-3Q21 infusion sector had revenue of HK $2.41 billion (up 28.4% year on year), but it was still lower than 1-3Q19 level, mainly due to: 1) low outpatient flow in primary and lower hospitals; 2) poor export sales (mainly dragging down sales of 1-3Q21 plastic bottles / glass bottles). However, we expect revenue growth of more than 30% in 2021 and sales of about 1.4 billion bottles per bag, of which: 1) non-PVC soft bag / upright soft bag sales growth is expected to be about 40% in 2021 (1-3Q21 year-on-year growth of 33.0 3Q21 58.8%); 2) plastic bottle / glass bottle sales growth is expected to exceed 10% in 2021 (1-3Q21 year-on-year growth rate is + 13.6 3Q21 4.0%) 3) Therapeutic infusion is expected to maintain a strong growth momentum (it is expected to account for 25% of total infusion sales in 2021), and heavyweight products such as peritoneal dialysate are expected to increase volume.
Small water needle / API: the scale is expected to expand rapidly
1-3Q21 small water needle rapid volume, revenue of 854 million Hong Kong dollars, an increase of 35.7% over the same period last year. We expect that with the rapid increase in sales of blockbuster products such as doxophylline, ambroxol and betastine, sales are expected to reach about 1.2 billion yuan in 2021. Sales of 1-3Q21 in the API sector reached HK $363 million (up 92.5% year-on-year). Considering that API sales are expected to recover as the epidemic recedes (for example, management directs that caffeine / azithromycin sales will reach 3500000,330 tons in 2021), we expect sales to reach about 600 million yuan in 2021. In terms of oral preparations, the management directs that sales are expected to reach 200 million yuan in 2021.
Multi-layer co-extruded biofilm: launched in 2021, sales or climbing multi-layer co-extruded biofilm in 2022-2023 as a new revenue / profit growth driving force for stone four drugs, designed and produced by the subsidiary Jiangsu Bosheng, with an annual production capacity of 10 million square meters and in-hand orders of 4 million square meters. Management guidelines 2021 / 2H22 will add 8 million / 12 million square meters of production capacity by the end of 2021. We estimate that the sales volume of 2021 Universe 2022 will be less than 1 million / 7 million / 15 million square meters in 2023, and the revenue will be more than 15 million / 200 million yuan / 500 million yuan respectively.
Risk hint: the recovery of large infusion plate is slower than expected, and the price of API falls.