occurrences
The company announced its 2021 results, achieving total operating income of 3.3 billion yuan, +33% year on year, net profit of 400 million yuan, -12% year on year, and basic earnings per share of 0.04 yuan.
The blockbuster product Letibao was released quickly after launch
After the company went public, Letibao quickly became popular. In 2021, the revenue of the company's medical and aesthetic business segment reached 399 million yuan, +1383.3% year on year, accounting for 12.1% of the total revenue, and achieved profit before tax of 249 million yuan, a significant increase of +971.1% over the previous year. The main reason is that Letibau is the botulinum toxin product with the highest sales volume in Korea for 5 consecutive years. It has the characteristics of high efficacy and high safety, and was recognized by doctors and consumers after it was marketed. In addition, benefiting from the company's huge marketing network, by the end of January, the company had cooperated with 40 agents, covering more than 200 cities in China, covering nearly 2,500 medical and aesthetic institutions nationwide, and the top 500 institutions covered more than 430.
By combining various methods such as self-development+agency, the medical and aesthetic product matrix company continues to expand its product matrix, transforming from an exclusive agent for a single product to a platform-based company integrating R&D, production and marketing in the medical and aesthetic field. (1) In terms of self-research, the company has more than 10 Class III medical device products, including the first generation of children's needles and the second generation of young girl needles. Nearly 20 Class II medical device products, including products such as Tong Yan Shuining (trade name: Jia Leyan) (2 ml/stick), have obtained medical device registration certificates approved by the National Drug Administration. (2) On the agent side, the company's agents can absorb sutures and tension-free urethral suspension straps and gold microneedle products to expand the implant thread and optoelectronics markets. (3) Furthermore, through the acquisition of Genesis, the company obtained the layout fat collection system LiPivage? ; A joint venture was established with Cyanite Microorganisms to jointly develop PHA microspheres and regenerative medicine materials based on biological manufacturing.
The pharmaceutical business has accelerated the transformation process, and high-end generic drugs have been approved for listing one after another under the generic drug business platform that continues to promote product development and innovation, continue to contribute to revenue, and become a powerful cash powerhouse. The generic drug business segment achieved revenue of 2.60 billion yuan in 2021, +18.2% over the same period last year, accounting for 79% of the Group's overall revenue. The influence of products in the key monitoring catalogue has gradually faded, and the company's generic drug sector's performance has officially entered an upward channel. The company's innovative pharmaceuticals and other businesses achieved revenue of 300 million yuan, +23.0% year on year. The company continues to accelerate innovation and transformation, continuously improve its independent research and development capabilities, and has built two major innovation platforms. (1) Xuanzhu Biotech's self-developed product pipeline is progressing rapidly. The annalazole sodium NDA has been accepted, and products such as pirosinil have been approved for clinical phase III. (2) Huisheng Biotech is currently the only company in China that has achieved full product coverage in the field of diabetes and complications. Currently, the company's NDAs for Mendon insulin injections, Mendon insulin 30 injections, and Mendon insulin 50 injections have been accepted by the National Drug Administration, and the innovative drug Gagliflozin is preparing to submit an NDA.
Market development efforts have increased, and profitability has declined
The company's gross margin in 2021 was 74.4%, -3.3pct compared to the previous year, mainly due to a slight drop in drug sales prices due to centralized volume procurement. The company's net interest rate was 12.7%, -6.5 pct year on year, and overall profitability declined. Mainly due to increased market development in the medical and aesthetic business and rapid growth in marketing expenses, the company's sales expenses ratio in 2021 was 16.6%, +1.6pct over the previous year.
Investment advice
The medical and aesthetic industry is booming, and the botulinum toxin market pattern is good. As existing medical and aesthetic users age, the penetration rate of botulinum toxin is expected to continue to increase. Domestic botulinum toxin has been approved for a long time, and Letibao has a first-mover advantage. The cost-effective ratio is expected to open up the medical and aesthetic market for “Gen Z” young people. The company has reserves of major medical and aesthetic products such as acupuncture for young girls and acupuncture for young people. Many products in the pharmaceutical sector are being researched, and long-term growth potential is good.
The company's EPS from 2022 to 2024 is expected to be 0.06/0.08/0.10 yuan/share, respectively, corresponding to the current stock price PE of 23.48, 18.35, and 14.09 times, respectively. Maintain a “buy” rating.
Risk warning
Letibao's marketing progress fell short of expectations, drug research and development fell short of expectations, and drug collection policies were uncertain.