Event: the company released the third quarterly report of 2022, 2022Q3 achieved operating income of 4.9 billion yuan (yoy-11%), realized return net profit of 470 million yuan (yoy-26%), deducted non-return net profit of 410 million yuan (yoy-34%). Among them, Q3 single-quarter revenue of 1.589 billion yuan (yoy-21%), net profit of 118 million yuan (yoy-41%), deducting non-return net profit of 99 million yuan (yoy-50%).
Comments:
The insufficient number of national provincial standards restricts the volume growth of formula particles, waiting for the inflection point of industry management.
In the revenue end, 2022Q3 achieved operating income of 4.9 billion yuan (yoy-11%), Q3 revenue declined mainly because ① is limited by the national standard-provincial standard quantity, the formula granule business failed to achieve volume growth, the current formal implementation of the national standard number of formula granules (another 69 standards are in the publicity stage), and the clinical needs of about 400-500 varieties, the lack of standard quantity leads to the terminal volume limit. ② is affected by the policy of collecting high-value consumables, and the company's smart supply chain business is affected to a certain extent. On the profit side, because the expense rate increases faster than the gross profit margin, the year-on-year decline in non-return net profit is greater than that on the revenue side. 2022Q3's gross profit margin rose 0.22 percent year-on-year, while the sales expense rate increased 2.03 percent year-on-year, and the R & D expense rate increased 1.48 percent year-on-year. Secondly, as the other income brought by government subsidies reached 53 million yuan (yoy+324%), the year-on-year decline in net profit was lower than that of deducting non-return net profit.
We believe that the logic of volume and price rise in the formula granule industry still exists, and the poor short-term performance is mainly affected by the insufficient number of provincial standards, the impact of the epidemic and other factors. With the acceleration of the introduction of national standards, provincial standards will be gradually replaced by national standards, which will help the industry to achieve rapid volume growth. At present, 200 national standards have been implemented, and another 69 standards are in the publicity stage. According to the current progress of national standards, the number of national standards is expected to reach 350-400 next year. It is expected to usher in a landmark business inflection point, driving the rapid volume growth of formula granule business.
Profit forecast: we estimate that the company's revenue from 2022 to 2024 will be 6.904 billion yuan, 9.636 billion yuan and 11.655 billion yuan respectively, an increase of-10%, 40% and 21% respectively over the same period last year.
It is estimated that the net profit from 2022 to 2024 will be 574 million yuan, 1.005 billion yuan and 1.257 billion yuan, an increase of-17%, 75% and 25% respectively over the same period last year, and the corresponding share price PE will be 32 times, 18 times and 15 times respectively. Maintain the "highly recommended" rating.
Risk tips: formula particles market expansion risk, formula particles price increase is blocked, formula particles collection risk, market competition aggravates the risk, product sales do not meet expectations.