Annual performance is in line with our expectations
The company announced its 2021 results: revenue of 2.52 billion yuan, an increase of 31.3% over the same period last year, and net profit of 920 million yuan, an increase of 22.5% over the same period last year, in line with expectations. The company announced a dividend of HK $0.35 per share, which was approved by the board of directors to buy back no more than 10% of the company's shares.
Trend of development
Ridaxian maintained rapid growth and introduced products came into the market one after another. The company's 1H/2H21 revenue increased by 15% to 57%, and its net profit to its parent increased by 4% to 92%. The sales of the core self-owned product Ridaxian (new thymus method) is 1.98 billion yuan, an increase of 26.1% over last year's high base compared with the same period last year. We expect to mainly benefit from the company's GTP channel contribution (GTP channel accounts for more than 62% for the whole year). Among the imported products: Zetai (zoledronic acid) achieved sales of 170 million yuan in 2021; naxitumab was launched in June and December 2021 in Hainan Boao and Tianjin Free Trade pilot Zone, and was included in the overseas special medicine catalogue of Jinghuibao in October 2021. We expect it to be officially approved for listing in 2Q22. Nomike (miconazole buccal tablets) was officially approved for listing in November 2021, and according to the company, sales channels have been built in more than 30 cities.
Actively build R & D team and increase R & D investment. In 2021, the company's gross profit margin was 76.8%, compared with the same period last year-0.9pct. The company has a sales team of about 720 people, covering about 4000 secondary and tertiary hospitals, with a sales expense rate of 23% in 2021, a year-on-year increase of-0.8pct, and a management expense rate of 8.2%, a year-on-year rate of-3.1pct. The company's product development team grew steadily. As of December 31, 2021, the company's product development team had about 100 people (about 80 in the same period in 2021). The R & D investment in 2021 was 134 million yuan, an increase of 78.2% year-on-year and 5.3% of the income.
Pay attention to the clinical progress of imported pipeline. The company has disclosed a combination of imported pipelines including 4 late-stage drugs and 4 early-stage drugs. Among the main pipeline molecules: we expect Saisheng to launch the domestic listing of neuroblastoma drug Omburtamab in 2022; RRx-001 (multi-mechanism small molecule drug candidate molecule involved in the regulation of CD47 pathway) domestic III patients have started the preparation of the group. We expect that the small molecule coupling drug PEN-866 (HSP90 small molecule coupling drug candidate) introduced from Tarveda is expected to complete the domestic IND declaration in 2022, and HSP90-PI3KSMDC is in the lead coupling optimization stage. We expect that in the future, with the gradual promotion of pipeline products, the company's product structure will gradually upgrade to innovative products.
Profit forecast and valuation
Due to the investment in pipeline progress, we reduced the net profit of 2022max by 5.2% to 959 million yuan / 1.039 billion yuan in 2023. The current share price corresponds to a price-to-earnings ratio of 5.2 times earnings to 4.8 times earnings in 2023. We use the SOTP valuation method to maintain the outperform industry rating, and the overall business of the company is progressing smoothly, but due to changes in equity and the adjustment of the pharmaceutical sector of Hong Kong stocks and the downward movement of the valuation center, we have lowered our target price by 10.0% to HK $13.50 corresponding to the price-to-earnings ratio of 7.6 pesques in 2023, which is 59.6% higher than the current share price.
Risk
The product pattern deteriorated, the patent expired drugs were collected, and the progress of new drug research and development was not as expected.