Incident: The company announced its 2022 semi-annual report, which achieved revenue of 897 million yuan in the first half of 2022 (+29.7%, year-on-year growth rate, same below); net profit of 185 million yuan (+58.7%); net profit of Fumo was 171 million yuan (+74.6%) after deducting net profit of non-Gumi. 2022Q2 achieved revenue and net profit of 397 million and 69 million yuan respectively, with year-on-year growth rates of 12.4% and 5.1%, respectively. Results for the first half of 2022 were in line with expectations.
Pipelines were steadily released, and collection quickly opened up the pharmaceutical business space: the company relied on technology and cost advantages to quickly shortlist for collection, and its performance increased rapidly. In 2021, the company's perindopril tert-butamine tablets and pregabalin capsules won the bid for the fourth batch of national collection and released quickly; atorvastatin calcium tablets, losartan potassium tablets, and lisinopril tablets won the bid for joint collection in 13 provinces of Guangdong. The company's subsequent pipeline was quickly released. Apixaban tablets and isoniazid tablets were approved for marketing in April 2022, and isoniazid tablets passed consistency; 2-3 varieties will be approved in the second half of the year. In terms of R&D pipelines, the company has a total of 10 products, including valsartan hydrochlorothiazide tablets, rivaroxaban tablets, and vigliptin tablets, which are under CDE review; in the second half of the year, 8-10 varieties are expected to be submitted for CDE review in the second half of the year, and more than 20 other products are under research. Abundant R&D and application pipelines lay a good foundation for the long-term expansion of the company's pharmaceutical business.
The release of API and pharmaceutical production capacity was accelerated: by the end of June 2022, 1) the company's 400-ton API technical improvement project was basically completed, and some workshops were ready to begin trial production; 2) the first phase of the Zhejiang and US 520 ton project completed the civil engineering main body; 3) the export of 3 billion tablets completed its own project and began trial production; 4) the high-end of convertible bond fundraising had completed the main construction on their own. The company's production capacity under construction and technological improvement progressed steadily as expected, supporting the smooth delivery of the company's orders.
It plans to raise 890 million yuan to accelerate the pace of new production capacity release in Xuancheng: the company disclosed the 2022 non-public offering plan on August 15. It plans to issue 63.89 million shares privately, raising no more than 882 million yuan, of which 1) 625 million yuan will be used for Xuancheng Minova's 3,760 tons of APIs and intermediates business; 2) 268 million yuan to supplement working capital. Xuanmei's new production capacity will further strengthen the company's integrated API formulation production capacity and CDMO acceptance capacity to support long-term performance.
Profit forecast and investment rating: We maintain the company's net profit of 2022-2024 at 296/4020/559 million yuan. The current market value corresponds to 2022-2024 PE valuation at 21/15/11 times. Considering the steady progress of the company's pharmaceutical business and CDMO business, we maintain the “buy” rating.
Risk warning: formulation declaration progress falls short of expectations, delivery of CDMO orders falls short of expectations, etc.