Incident: The company released its three-quarter report for 2022. In the first three quarters, it achieved operating income of 1,371 billion yuan, a year-on-year increase of 20.59%, net profit of 455 million yuan, a year-on-year increase of 16.73%, after deducting non-net profit of 436 million yuan, an increase of 13.44% over the previous year.
Revenue and profit have reached record highs in a single quarter, and the amount of injections released at home and abroad is worth looking forward to. The company's revenue and profit continued to grow steadily in the first three quarters of 2022. We expect to be driven mainly by rapid revenue growth in digestive tract drugs, non-steroidal anti-inflammatory drugs, and anti-allergic drugs. On a quarterly basis, 22Q3 had revenue of 575 million yuan (+1.97% year on year, same below), net profit of 168 million yuan (+1.70%), net profit of 168 million yuan (+1.70%) after deducting non-net profit of 167 million yuan (+0.97%). Q3 The company achieved a good recovery after the epidemic abated. Revenue and profit both reached record highs in a single quarter. The profit side growth rate was slower than the revenue side mainly due to the increase in R&D expenses and financial expenses. 22Q3 R&D expenses were 126 million yuan (+33.10%), accounting for 21.87% of revenue, an increase of 3.47 pp over the previous year, and 25.6 million yuan (+71.93%) of financial expenses, accounting for 4.45% of revenue, up 1 year on year.
55 pp. The company's overseas injectable products continue to be enriched, and the production capacity bottleneck is expected to gradually be lifted. Continued release is worth looking forward to.
There was a slight decline in gross margin, and a slight increase in the three expense ratios. Gross profit margin: The gross margin for the first three quarters of 2022 was 76.64% (year-on-year -0.76pp/+5.06pp from 2021), and Q1/Q2/Q3 gross margins were 79.50%, 72.05%, and 78.22% respectively. Q2 gross margin declined due to increases in raw material costs, manufacturing costs, and the impact of the epidemic, and Q3 recovered relatively well. Expense rate: The sales expense rate for the first three quarters of 2022 was 12.48% (-4.31pp), the management expense rate was 6.11% (-1.96pp), the financial expense rate was 4.65% (+7.57pp), and the total cost rate for the three expenses was 23.24% (+1.30pp). The decline in the sales expense ratio was mainly due to rapid revenue growth, and the increase in the financial expense rate was mainly due to accruing interest on convertible bonds. Interest expenses for the first three quarters were 6.789 million yuan (+682%). 22Q3 The sales expense ratio is 12.07% (-2.46pp), the administrative expenses rate is 6.10% (-1.05pp), the financial expense ratio is 4.45% (+1.55pp), and the total cost rate for the three items is 22.62% (-1.95pp). R&D investment: In the first three quarters of 2022 and 22Q3, R&D expenses were 258 million yuan (+26.52%) and 126 million yuan (+33.10%), respectively, accounting for 18.84% (+0.88pp) and 21.87% (+3.47pp) of revenue, respectively. R&D investment and revenue share continued to grow.
The layout of contrast agents and formulation pipelines drive growth at home and abroad. The company's 2022 semi-annual report revealed that iopacol injection, the first contrast agent generic drug developed, obtained marketing approval from the Netherlands in May and successfully entered the contrast agent field. At the same time, it applied for generic drug applications from China, Europe and the United States. The company has rich technical reserves and experience in formulation technology research and global registration. Currently, it has obtained 188 product approvals, including 66 domestic chemical drug approvals, 80 overseas formulation production batches, 38 API approval numbers, and 4 pharmaceutical excipient production approval numbers. Currently, there are more than 140 varieties under development, involving the first replicate+challenging patented generic drugs, 505b (2), and new physical compound drugs. The rich products are expected to drive continuous rapid growth in domestic and foreign business. On the domestic side, approval of new products, sales of collected varieties, expansion of adaptations, and upgrading of original products will all drive the continuous growth of domestic business; on the foreign side, active bidding for approved varieties, new market development, new product listings, and CMO business will also drive the continuous growth of foreign business.
Profit forecast and investment suggestions: According to the three-quarter report, considering the company's smooth recovery from the epidemic and the continued expansion of injectable types, we adjusted our profit forecast. We expected the company's revenue for 2022-2024 to be 19.83, 25.13 billion yuan, and 32.23 billion yuan (1,890, 23.21 million yuan, and 2,803 billion yuan before adjustment), up 31.5%, 26.7%, and 28.3% year on year; net profit of 5.87, 7.67 million yuan and 1,003 million yuan (519 million yuan before adjustment, 670 million yuan, 849 million yuan), up 40.9%. 30.7% and 30.
7% The current stock price corresponds to 2022-2024 PE and is 19/15/11 times. Considering that the company is a scarce domestic injectable exporter, it is currently in a stage of rapid growth where products are being rapidly approved and both overseas and domestic are gaining strength. Continued rapid growth in the future is worth looking forward to, maintaining a “buy” rating.
Risk warning events: risk of drug price reduction; risk of domestic and foreign product approval falling short of expectations; risk of external policy uncertainty; risk of delays or untimely updates of disclosed information.