Performance preview
The company expects that the net profit of homing in the first half of 2022 will increase by 95% Mel 110% compared with the same period last year. The company has issued a positive profit forecast. The company expects that the net profit of homing in the first half of 2022 is expected to achieve an increase of 110% compared with the same period last year, which is higher than we expected. It is mainly due to the higher-than-expected growth of API turnover and the decline of the company's comprehensive sales expense rate compared with the same period last year.
Pay attention to the main points
The new business sector of API is developing well, and the revenue growth of the sector in the first half of 2022 is higher than expected.
According to the company's forecast, the turnover of API in the first half of 2021 is about HK $250 million, the turnover for the whole year of 2021 is about HK $530 million, and the turnover in the first quarter of 2022 is about HK $350 million (an increase of 267.1% over the same period last year). In the first half of 2022, the turnover of APIs increased by more than 2 times compared with the same period last year, of which the turnover of caffeine products increased by more than 4 times year-on-year.
The growth of net profit of homecoming in the first half of 2022 exceeded expectations. The company forecasts that 1) the API sector is developing smoothly and its contribution to the company's profit continues to increase; 2) due to the increase in turnover in the API sector, the company's comprehensive sales expense rate has decreased compared with the same period last year. The company plans to continue to optimize and upgrade the production process, transform and improve the environmental treatment capacity in the future, accelerate the release of raw material capacity, and further show the product advantages such as cost and quality.
We believe that based on the advantage of API + preparation integration, the company has gradually extended the industrial chain up and down, forming a diversified business layout. 1) API sector: the company announced that caffeine production capacity is expected to reach about 7000 tons in 2022; 2) preparation section: the company announced on July 13 that in the seventh batch of national collection, the company's ampoule packaging Bromhexine Hydrochloride injection (2ml:4mg) and cefaclor suspension (0.125g) won the bid in the first and second place, respectively. 3) Medicinal package plate: the company announced on July 6 that the subsidiary Bo Sheng Medical Materials was approved to be listed independently on the new third board.
Profit forecast and valuation
We keep our 2022 and 2023 EPS forecasts unchanged at HK $0.39 and HK $0.47, corresponding to 48.3% and 19.9%YoY. The current share price corresponds to a price-to-earnings ratio of 11.0 times 2023 / 9.2 times 2023.
We maintain an outperforming industry rating, and taking into account the pick-up in the valuation of the Hong Kong pharmaceutical sector, we raise our target price by 4.7% to HK $5.30 corresponding to 13.6 times 2022 price-to-earnings ratio and 11.3 times 2023 price-to-earnings ratio, which is 23.3% higher than the current share price.
Risk.
The sales volume of the new product is not as expected, and the result of winning the bid is not as expected.