Event: the company released its 2021 annual report, with operating income of 7.671 billion yuan in 2021, an increase of 18.22% over the same period last year; net profit of 687 million yuan, up 19.87% over the same period last year, deducting 678 million yuan of non-return net profit, an increase of 33.92% over the same period last year; and net operating cash flow of 392 million yuan, an increase of 99.12% over the same period last year.
Comments:
(1) Formula granule business has a strong growth of 41.6%, and the three advantages of "raw material supply + standard setting + production capacity" build the company's core competitiveness.
In 2021, the business income of traditional Chinese medicine formula granules and prepared slices was 4.235 billion, an increase of 41.60% over the same period last year, and the gross profit margin was 69.74%, down 1.42% from the same period last year. On November 1, 2021, the pilot project of traditional Chinese medicine formula granules ended, and the sales scope of traditional Chinese medicine formula granules extended from secondary Chinese medicine hospitals and above to all medical institutions qualified for the practice of traditional Chinese medicine, and the industry ushered in a blue ocean era with large increments. The company's formula granule business has three core competencies: the ① raw material supply advantage, the policy requires the production enterprise to process the prepared pieces of traditional Chinese medicine for the production of traditional Chinese medicine formula granules, which is not allowed to be purchased, while the company continues to expand the construction of medicinal material planting base to ensure the stability of medicinal material quality, thus forming a traceable internal control quality standard to meet the production of high quality traditional Chinese medicine formula granules. The company has first-mover advantages in the formulation of ② standards. In 2021, the company completed the final examination of 10 varieties of national standards, completed the supplementary research of 71 varieties, and 11 varieties were shortlisted. In terms of provincial standard declaration, the company has completed the declaration and evaluation of provincial standards in 26 provinces, and 33 varieties have been publicized. ③ capacity advantage, the company's eighth largest production base project is officially launched in Jinan, the base covers an area of 100mu, after completion, it will achieve annual extraction of 10,000 tons of single traditional Chinese medicine and production of 3000 tons of formula particles to ensure that formula particles can meet the incremental market demand in time.
(2) Xuebijing is expected to maintain a steady growth of 20% in recent years, and the pipeline of finished drug products continues to be rich.
In 2021, the revenue of finished drug business was 1.152 billion, up 36.74% from the same period last year; the gross profit margin was 70.49%, down 4.29% from the same period last year; of which Xuebijing injection income was 622 million yuan, an increase of 23.51% over the same period last year. Xuebijing injection is currently the only national class II new drug approved by the State Drug Administration for the treatment of sepsis, multiple organ dysfunction syndrome and severe and critical COVID-19. Xuebijing is considered as a variety of national medical insurance catalogue and included in the COVID-19 Guide. With the company's market promotion, it is expected to continue to grow by 20% in recent years. Shagrel hydrochloride tablets, praxol hydrochloride tablets, rocuronium bromide injection and enoxaparin sodium injection were approved to be listed in 2021 to further enrich the company's finished drug product line.
(3) more than 30 projects under research accumulate growth potential for the company, and a number of R & D projects are progressing smoothly to enhance the company's development expectations.
In 2021, the company's R & D expenditure was 292 million, an increase of 14.5% over the same period last year. At present, the company is studying more than 30 projects, mainly chemical drugs, including 5 category 1.1 new drug projects, 12 projects to be reviewed by CDE and 6 in the clinical research phase. Emdifen tablet is the first oral PD-L1 small molecule inhibitor approved by clinical trials in China. Four dose groups of tolerance test subjects have been enrolled, and preliminary competition, PD and safety data have been obtained, and the data show that the drug safety is good. The KB project has conducted a phase b clinical study of Ⅱ, and the enrollment is progressing smoothly. The PTS project has completed 3 batches of verification batch lofting, passed the full inspection, and obtained the notice of production site inspection registered by the State Bureau. In terms of overseas application, Xuebijing injection has obtained the technical advice of the FDA Pre-IND meeting, and has submitted an application for the second round of Pre-IND conference communication to FDA, waiting for a new round of communication meeting; the KB project has successfully obtained the Ⅱ phase clinical license of FDA.
Profit forecast: we predict that the company's revenue from 2022 to 2024 will reach 9.079 billion, 11.404 billion and 14.174 billion respectively, an increase of 18.4%, 25.6% and 24.3% over the same period last year. The homing net profit is 1.046 billion, 1.543 billion and 2.032 billion respectively, and the corresponding EPS is 0.35,0.51 and 0.68 yuan respectively. At present, the stock price corresponds to the PE valuation of 22.8,15.5,11.7 times, maintaining the company's "highly recommended" investment rating.
Risk tips: the risk of market expansion of formula particles, the risk of excessive price decline of medical devices, and the sales of proprietary Chinese medicine and other products do not meet expectations.