Main points of investment:
Export-oriented heparin API and preparation leader, business expansion to CDMO and innovative drug Hypri is the world's largest supplier of heparin API and the top three enoxaparin preparation companies, has formed a diversified business system dominated by global sales of heparin raw materials / preparations and supplemented by biological macromolecule CDMO. The company's 2022H1 achieved revenue of 3.76 billion, and the proportion of revenue from heparin API / heparin preparation / CDMO business was 43%, 43%, 13%, respectively. Three innovative drugs are expected to be commercialized in the next 23 years.
With the increase of the amount of operation, the upstream industry focuses on Chinese heparin for anticoagulant and thrombus therapy during and after operation. with the increase of dialysis and related surgery, its raw materials are mainly extracted from pig small intestine, and the number of pigs raised in China is large. The top four domestic heparin raw material drug suppliers account for about 70% of the world. According to Frost Sullivan, the global market for heparin APIs is $2.6 billion in 2021, with CAGR reaching 6.2 per cent in 2021-2025. Hypree is the world's largest heparin API company, accounting for about 40% of the global supply in 2018. The global scale of downstream heparin preparations will be US $5.1 billion in 2021, and the CAGR will reach 8.1% from 2021 to 2025. 50% of the market share of the main variety enoxaparin is still occupied by the original Sanofi, and there is still a lot of room for substitution.
The gross profit of raw material Zhancheng strategy continues to decrease and withdraw cash, and the gross profit of 21Q3-22Q2 API of preparation export company is 24.7%, 29.1%, 27.7%, 32.4%, respectively. The improvement of the number of live pigs leads to the downward purchase price of heparin upstream, which is gradually transmitted to API and preparation. The company's sales of low molecular weight heparin preparations in China, the United States and Europe continue to advance, and the market share in Europe is expected to reach 26% in 2021, gradually replacing the original Sanofi, and is expected to reach 40% in 3-5 years. In cooperation with Sandoz, the second largest generic drug company, the US market is expected to double in 22 years. The domestic market share is only 8%, which is expected to increase rapidly with the help of follow-up collection. Sales volume and gross profit are expected to increase in the future.
Earnings forecast, valuation and rating
We estimate that the company's income in 2022-24 will be 77.62 CAGR 90.17 / 10.65 billion, with a corresponding growth rate of 21.95%, 16.16%, 18.12%, 10.88, 13.49 / 1.701 billion, 351.68%, 24.02%, 26.08%, 91.86% and 0, respectively. Phase 74 / 0 estimate. 92 value / 1.16 yuan. According to the segment valuation under the DCF method, the average value of reference chemical drugs is 19 times PE and 44 times PE, and the measured value per share is 20.68 yuan. Combining the above valuation methods, we will give the target price of 19.92 yuan in 2023, covering it for the first time and giving it a "buy" rating.
Risk hints: raw material price rise risk; preparation product price drop risk; CDMO order is not as expected; innovative drug development is not as expected; enoxaparin sodium collection is not as expected