Event: on July 20, Tailong Pharmaceutical issued an announcement that the company intends to buy back the company's shares by means of centralized bidding. This time, the company intends to buy back the company's shares with its own funds at a price of not more than 7 yuan per share (inclusive), and the total repurchase fund is not less than 40 million yuan (inclusive) and not more than 80 million yuan (inclusive). The implementation period of this repurchase is from July 14, 2022 to July 13, 2023.
The effect of management optimization is beginning to show, and the incentive plan is expected to accelerate the business rebound. This buyback is based on the confidence in the company's future development prospects and the judgment of the company's value, in order to further improve the company's long-term incentive mechanism and fully mobilize the enthusiasm of the company's employees, effectively closely combine the interests of shareholders, the company's interests and the personal interests of employees, promote the long-term and healthy development of the company, and comprehensively consider the company's operating situation, financial situation and development strategy, and the company's future profitability. The company intends to use its own funds to buy back the company's shares through centralized bidding transactions for the implementation of employee stock ownership plans or equity incentives.
In the second quarter, the results were concentrated under pressure, and the approval of drug supplement applications helped to improve the stability of performance. According to the semi-annual pre-loss announcement issued by the company, due to the influence of domestic policies on the prohibition and restriction of the sale of four types of drugs, the sales of the company's heat-clearing and detoxification products are limited, the net profit of 22H1 is about-26 million yuan, the net profit of deducting non-return is about-16 million yuan, it is estimated that the net profit of return to mother in the second quarter is about-28.33 million yuan, and the net profit of deduction of non-return to mother is about-18.45 million yuan. In order to alleviate the problem of dependence on a small number of core products, the company applied to supplement five pharmaceutical products, including Huoxiang Zhengqi mixture, Shengmai Yin (Dangshen Fang), Wuzi Yanzong Oral liquid, Banlangen syrup and Honeysuckle dew, and recently received a notice of approval issued by the State Drug Administration and became the new listing license holder. This will help to form seasonal complementarity with the company's existing core products (Shuanghuanglian oral liquid series, etc.) in the field of cold medicine, and build a more scientific product portfolio; the introduction of other drugs will further enrich the company's product pipeline and enhance the company's market competitiveness. promote the sustainable development of the company.
Investment advice: the company as a whole benefits from the revival of traditional Chinese medicine, core business stability, "Shuanghuanglian"
Series of products have a deep moat, and the products form a platform combination, benefiting from the trend of differentiation, differentiation and upgrading. The business of traditional Chinese medicine slices and drug R & D relies on professional subsidiaries for a long time to establish a benchmarking image in the industry and benefit from the long-term development of the medical industry. The company actively seeks change, and the background strength of the new controller is strong, which will be further blessed and promoted in resource matching, management mode and development ideas, so as to promote long-term, healthy and sustainable development. We are optimistic about the new vitality and new appearance brought about by the equity change, and the long-term development space of the company in the future. it is estimated that the EPS in 2022-2024 will be 0.07,0.17,0.25,77.2x, 32.2x and 22.8x corresponding to the current stock price multiple of 77.2x, 32.2x and 22.8x.
Risk hints: large fluctuations in raw material prices, lower-than-expected downstream demand, changes in epidemic situation and other vaccines, R & D and promotion process of specific drugs, changes in drug R & D demand, R & D progress less than expected, and the company's net profit has declined in the past two years.