Events:
Hongri Pharmaceutical issued an announcement: in the first half of 2022, the company achieved operating income of 3.312 billion yuan, down 5.01% from the same period last year, and realized net profit of 352 million yuan, down 19.56% from the same period last year. In the second quarter of 2022, the company achieved revenue of 1.579 billion yuan, down 14.51% from the same period last year. The net profit of returning to the mother was 114 million yuan, down 53.43% from the same period last year.
Main points of investment
The performance is basically in line with expectations, and the switching of national standards and the impact of the epidemic put short-term pressure on the formula granule business. In the first half of 2022, the company realized operating income of 3.312 billion yuan, down 5.01% from the same period last year, and realized net profit of 352 million yuan, down 19.56% from the same period last year. In the first half of 2022, the income of traditional Chinese medicine formula granules and prepared slices was 1.629 billion yuan, 9.5% lower than the same period last year, and the gross profit margin was 65.10%, 3.31% lower than the same period last year; in the first half of the year, the switching of national standards and epidemic control, the prescription volume of formula granule terminals was reduced, and the prescription volume declined compared with the same period last year; the gross profit margin declined mainly because the implementation of national standards increased the production cost per unit formula granules.
The decline in net interest rate is mainly due to the implementation of the two-vote system in the national standard and the change of product structure. In the second quarter of 2022, the company's overall net interest rate was 6.90%, down 6.08 percentage points from a year earlier. In the second quarter of 2022, the company's gross profit margin was 52.38%, down 3.13% from the same period last year; the sales / management / R & D expense rate was 32.59%, 6.79% and 3.9%, an increase of 2.82% and 1.29% over the same period last year. We analyze that the growth of the sales expense rate is affected not only by the implementation of the two-vote system in the GB standard, but also by changes in the income structure.
The income of medical device products reached 420 million yuan, down 25.77% from the same period last year, and the gross profit margin was 41.07%, an increase of 1.70% over the same period last year. The pharmaceutical machinery wisdom supply chain achieved revenue of 398 million yuan, an increase of 54.28% over the same period last year, with a gross profit margin of 22.21%, a decrease of 4.64% over the same period last year. Proprietary medicines and APIs maintained steady growth.
Be optimistic about the inflection point of the price increase of formula particles in the fourth quarter. 1) the formula granule enterprise standard inventory products have been gradually digested, and the national standard and provincial standard filing work has been completed with a higher progress. 2) with the addition of national standard varieties and the promotion of production capacity, the number of national standard varieties will increase. We expect that from the fourth quarter, the hospital terminal will be able to use more national standard varieties, and the shipments of national and provincial standards will increase month-on-month. At the same time, with the price increase of national standard varieties, we are optimistic about the inflection point of volume and price growth of formula particles in the fourth quarter. Leading enterprises have the advantages of production capacity, technology, resources, scale, full-production chain and so on.
Profit forecast and investment rating health insurance supports the increase of provinces and the opening of sales terminals, promotes the expansion of the traditional Chinese medicine formula granule industry, and is optimistic about the growth of formula granules after the implementation of the national standard. It is estimated that the EPS in 2022-2024 will be 0.26, 0.34, 0.42 yuan, respectively, and the corresponding stock price PE will be 22.74x17.39, 14.10 times, covering for the first time and giving a "buy" rating.
The risk indicates that the switching of the national standard of formula particles is not as expected; the operation of the company is not as expected; the epidemic affects business operation; competition intensifies; macroeconomic development is not as expected; medical policy risks and so on.