Event: the company released its mid-2022 report that its operating income in the first half of the year was 897 million yuan, an increase of 29.74% over the same period last year; its net profit was 185 million yuan, an increase of 58.71% over the same period last year; and its non-net profit was 171 million yuan, an increase of 74.58% over the same period last year.
CDMO and preparations drive rapid growth and speed up strategic transformation. In the first half of 2022, the company achieved rapid growth in revenue and net profit, and the growth rate at the profit end was faster than that at the revenue end. We expect that mainly due to the high gross margin of CDMO, the rapid growth of preparation business, and the continued increase in revenue share, the company's gross profit margin in the first half of the year was 42.19%, an increase in 5.11pp compared with the same period last year.
In a single quarter, 22Q2 realized revenue of 397 million yuan, an increase of 12.38 percent over the same period last year, and net profit of 69.39 million yuan, an increase of 5.13 percent over the same period last year, deducting 62.16 million yuan of non-net profit, an increase of 17.02 percent over the same period last year.
It is determined to increase production and expand production to further increase capacity reserves and constantly promote the integration strategy. The company announced that it intends to issue no more than 6389.48 million shares non-publicly to no more than 35 (including) specific investors, with a total fund-raising of no more than 892 million yuan. After deducting the issuance cost, it is intended to be used for the "annual production of 3760 tons of API and intermediate projects" and supplement current funds, further increase production capacity reserves, and continue to promote the integration strategy of "intermediates + characteristic API + preparations".
The gross profit margin continued to rise, and the rate of expenses for the three items decreased slightly. The company's gross profit margin in the first half of 2022 was 42.19%, an increase of 5.11pp compared with the same period last year, of which Q2 gross profit margin was 44.49%, an increase of 4.00pp compared with the previous year, mainly due to the rapid growth of CDMO and preparation business with high gross margin on the one hand, and significant scale effect on the other hand after the release of some products. The sales expense rate, management expense rate and financial expense rate were 1.63%, 10.26% and 0.63% respectively, year-on-year changes-0.31pp,-0.56pp,-0.
99pp, the rate of expenses for three items decreased slightly, mainly due to the rapid growth of income.
CDMO, preparations continue to make efforts, API varieties, customers continue to enrich. 1) accelerate the layout of CDMO business to build a growth point for future performance. The company and Merck & Co Inc signed a 10-year CDMO strategic cooperation agreement in the field of pet medicine, veterinary medicine and animal health. The 2022 report revealed that the first phase of 9 projects have been carried out at different stages and are about to be commercialized.
At the same time, the company actively arranges the small nucleic acid CDMO business to provide raw materials for domestic and foreign mainstream nucleic acid testing and gene sequencing products to build new growth points; the acquisition of 49% stake in Xuancheng Minohua further improves the software and hardware strength of CDMO.
2) the preparation business actively implements the strategy of "technology transfer + independent declaration + domestic MAH cooperation", collecting and collecting varieties continuously, a number of self-developed and cooperative preparation varieties are expected to be approved and put on the market one after another, and the patent expires "heavyweight drugs" in advance, and the preparation transformation has achieved phased results. 2022H1, the company's perindopril tert-butylamine tablets to achieve collection and renewal, last year won the bid for Prebalin capsules, losartan potassium tablets, Atto vastatin calcium tablets, lisinopril tablets normal delivery. In terms of self-research and cooperative varieties, at present, the company has 10 preparation products on the domestic market, 8 products in the CDE review, 5 projects such as propofol fumarate tinofovir tablets, Englerjing tablets and Daglejing tablets are about to enter BE through formal BE,3-5 projects, and more than 20 products are under research. At present, many products such as sioglitine and metformin tablets have been arranged for drugs with expired patents. 3) APIs welcome new production capacity, new customers and new varieties. In terms of production capacity, the expansion of the three API production bases has increased the production capacity of about 2500 tons of APIs and intermediates, laying the foundation for future growth. Xuancheng Minohua has entered the volume stage. Customers, on the basis of major customers KRKA, continue to open up new customers and new markets. In terms of products, the company has achieved more than 20 international and domestic commercial varieties, focusing on the core treatment field.
Profit forecast and investment suggestions: according to the China report, considering the steady growth of the company under the high base and the continuous investment in R & D and production capacity, we fine-tune the profit forecast. The company's 2022-2024 revenue is expected to be 16.95,21.45 and 2.59 billion yuan (18.04,23.75 and 2.959 billion yuan before adjustment), an increase of 34.7%, 26.5% and 20.8% over the same period last year.
80,3.65 and 476 million yuan (3.02,4.14 and 567 million yuan before adjustment), an increase of 96.6%, 30.4% and 30.3% over the same period last year; the corresponding EPS is 1.03,1.34,1.74 yuan. At present, the company's share price corresponds to 22-24 times PE on 28-22-17, considering that the company is in the stage of expansion and upgrading of APIs and accelerated transformation of preparations and CDMO, and maintains a "buy" rating.
Risk reminder events: environmental risk, quality risk, risk of price fluctuation of APIs and intermediates, risk that product research and development does not meet expectations, risk of delayed or untimely updating of public information.