Event: the company released its three-quarter report in 2022, with revenue of 1.231 billion yuan in the first three quarters, an increase of 33.96% over the same period last year, a net profit of 214 million yuan, an increase of 58.06%, and a non-net profit of 212 million yuan, an increase of 85.12% over the same period last year.
CDMO, preparations drive rapid growth, and strategic transformation is accelerated. In the first three quarters of 2022, the company maintained rapid growth in revenue and net profit, and the growth rate at the profit end was faster than that at the revenue end, which we expect to be mainly due to: 1) high gross margin CDMO, rapid growth of preparation business, and continued increase in revenue share; 2) the company's 49% minority stake acquisition in Xuancheng Minohua has had a positive effect on homecoming net profit. The company's gross profit margin in the first three quarters is 40.85% (year-on-year + 3.93pp, the same below). In a single quarter, 22Q3 realized income of 333 million yuan (+ 46.82%) and net profit of 29.34 million yuan (+ 54.
11%), deducting non-net profit of 40.7 million yuan (+ 148.05%).
513 million yuan was sold in Liaoyuan Pharmaceutical Co., Ltd., and the capacity structure was further optimized. The company announced that it signed an equity transfer agreement with Jiangxi Jimin trusted Pharmaceutical Industry Investment Co., Ltd., intending to transfer all the shares of Liaoyuan Pharmaceutical Industry to Jimin trusted Investment, with a transaction consideration of 513 million yuan and an estimated increase of 173 million yuan in net profit. Jimin Trust Group currently has more than 20 new drugs under research, with a large demand for CDMO production capacity. Through this cooperation, the company will become an important partner in its innovative drug CDMO field, and at the same time, it will also enable the company to further optimize its capacity structure and accelerate strategic upgrading and transformation.
The gross profit margin continued to rise, and the rate of expenses for the three items decreased slightly. The company's gross profit margin in the first three quarters of 2022 is 40.85% (+ 3.93pp), which is expected to be mainly due to the high gross margin of CDMO, the rapid growth of preparation business and the significant scale effect after the release of some products, of which 22Q3 gross profit margin is 37.07% (+ 0.61pp), which remains stable. The sales expense rate, management expense rate and financial expense rate were 2.09%, 11.44% and 0.40% respectively, with year-on-year changes-0.12pp,-0.71pp and-0.93pp. The three expense rates decreased slightly, mainly due to the rapid growth of income.
CDMO, preparations continue to make efforts, API varieties, customers continue to enrich. 1) accelerate the layout of CDMO business to build a growth point for future performance. The company and Merck & Co Inc signed a 10-year CDMO strategic cooperation agreement in the field of pet medicine, veterinary medicine and animal health. The 2022 report revealed that the first phase of 9 projects have been carried out at different stages and are about to be commercialized.
At the same time, the company actively arranges the small nucleic acid CDMO business to provide raw materials for domestic and foreign mainstream nucleic acid testing and gene sequencing products to build new growth points; the acquisition of 49% stake in Xuancheng Minohua further improves the software and hardware strength of CDMO.
2) the preparation business actively implements the strategy of "technology transfer + independent declaration + domestic MAH cooperation", collecting and collecting varieties continuously, a number of self-developed and cooperative preparation varieties are expected to be approved and put on the market one after another, and the patent expires "heavyweight drugs" in advance, and the preparation transformation has achieved phased results. 2022H1, the company's perindopril tert-butylamine tablets to achieve collection and renewal, last year won the bid for Prebalin capsules, losartan potassium tablets, Atto vastatin calcium tablets, lisinopril tablets normal delivery. In terms of self-research and cooperative varieties, at present, the company has 10 preparation products on the domestic market, 8 products in the CDE review, 5 projects such as propofol fumarate tinofovir tablets, Englerjing tablets and Daglejing tablets are about to enter BE through formal BE,3-5 projects, and more than 20 products are under research. At present, many products such as sioglitine and metformin tablets have been arranged for drugs with expired patents. 3) APIs welcome new production capacity, new customers and new varieties. In terms of production capacity, the expansion of the three API production bases has increased the production capacity of about 2500 tons of APIs and intermediates, laying the foundation for future growth. Xuancheng Minohua has entered the volume stage. Customers, on the basis of major customers KRKA, continue to open up new customers and new markets. In terms of products, the company has achieved more than 20 international and domestic commercial varieties, focusing on the core treatment field.
Profit forecast and investment advice: according to the three-quarter report, considering the disturbance of the epidemic situation, we adjust our profit forecast and estimate the company's 2022-2024 revenue of 16.95,20.37 and 2.451 billion yuan (before the adjustment), an increase of 34.7%, 20.2% and 20.3% over the same period last year. The net profit of homing was 2.80,3.36 and 438 million yuan (2.80,3.65 and 476 million yuan before the adjustment), up 96.6%, 20.0% and 30.2% over the same period last year. At present, the company's share price corresponds to 22-24 times PE on 25-21-16, considering that the company is in the stage of expansion and upgrading of APIs and accelerated transformation of preparations and CDMO, and maintains a "buy" rating.
Risk reminder events: environmental risk, quality risk, risk of price fluctuation of APIs and intermediates, risk that product research and development does not meet expectations, risk of delayed or untimely updating of public information.