The company issued a pre-increase announcement on 2022 performance: it is expected to achieve a net profit of 219 million yuan to 248 million yuan in 2022, an increase of 50.07% to 70.01% over the same period last year, and an estimated deduction of 208 million yuan to 237 million yuan in net profit, an increase of 55.85% to 77.66% over the same period last year.
CRO/CDMO/CMO: customer cooperation continues to deepen, commercial projects steadily increase. In the first half of 2022, the revenue of this sector has accounted for 57.65% of the total revenue, the company has been recognized by a number of customers in the European and American markets, and has become a strategic supplier for a number of pharmaceutical companies. We expect that with the continuous strengthening of the company's technical capacity and talent reserve, it will still be in a period of rapid development in the future.
Azvudine is included in the health insurance catalogue, which may bring more performance increments to the company. Review of the progress of Azvudine: in 2021, the real biological Azif is scheduled to be approved by the State Drug Administration for the treatment of HIV; in May 2022, the company disclosed that Qizheng Pharmaceutical, a wholly owned subsidiary, signed a "Framework Agreement on entrusted processing and production" and a "quality Agreement on entrusted production of drugs" with real organisms for the processing and production of Azvudine tablets. On July 25, 2022, the State Drug Administration approved Azvudine tablets for the treatment of novel coronavirus with emergency conditions; on January 13, 2023, the company received a notice of approval for listing of azivudine chemical raw materials issued by the State Drug Administration; on January 18, 2023, at a press conference on the adjustment of the national health insurance drug catalogue, it was announced that azivudine tablets were officially included in the national health insurance drug catalogue with a price of 11.58 yuan / tablet / 3mg.
Characteristic API and intermediates: the capacity bottleneck has been solved and the production capacity has been gradually released to achieve development. The company was previously subject to capacity constraints, with the orderly progress of the API production base, the company's capacity bottleneck has been solved. In terms of specific varieties, the company's existing products Entecavir, Bicyclol, Posaconazole, Citafloxacin, Nebiprolol and Fesotan are in the forefront of the international market share, and the new varieties such as Shugeng glucose are expected to form a good relay.
Preparation: the combination of imitation and creation opens the space for long-term growth. In the field of imitation pharmaceuticals, the company has signed a strategic cooperation agreement with STADA to carry out long-term and comprehensive cooperation on the joint development and global marketing of chemical generic pharmaceutical products; STADA is a major German pharmaceutical company for more than a century, selling its products in about 120 countries around the world, and its products can be sold in many countries after approval. In terms of innovative drugs, the clinical phase II trial of Brozo sodium in the treatment of ischemic stroke has been completed.
Profit forecast and investment advice: the company's three major business sectors coordinated development, strong technical strength, capacity reserves, clear growth motivation. The inclusion of Azvudine tablets in health insurance is expected to contribute some performance flexibility and provide more certainty for the future development of the company. We estimate that the company's 2022-2024 net profit will be 2.25 USD 343,000,000 yuan, corresponding to PE 4932max 21X, maintaining a "highly recommended" rating.
Risk tips: production capacity construction is not as expected, Azvudine sales are not as expected, drug research and development progress is not as expected, exchange rate fluctuations, production, environmental protection and other risks.