Guoyuan Hong Kong issued a report saying that it paid attention to Jihua Biomedical Medicine (02327-HK) for the first time and gave it a buy rating, with a target price of HK $0.80. Taking into account the size, liquidity and other factors, the 2011 fiscal year is given a price-to-earnings ratio of 15 times, which is about 45% discount to the industry average price-earnings ratio, and the target price is HK $0.8, which is 35.6% higher than the current price. as the company's pharmaceutical sales scale expands in the future, the company's valuation level will have a lot of room for improvement.

The report points out that it is involved in the field of characteristic APIs to improve profitability. Citalopram, a characteristic antidepressant raw material for the treatment of depression, is about to go into production with a design capacity of 30 tons, has now completed GMP certification, and the company is actively preparing for FDA certification in the United States, which it hopes to export to the United States in 2012. At present, the domestic market scale of citalopram preparation is about 500-600 million RMB, while the foreign market demand is large.

The company expects sales of HK $4 million in fiscal year 2011, and if the US FDA certification is approved in fiscal year 2012, exports of citalopram will reach HK $23 million and domestic sales will reach HK $7 million. Because it is a characteristic API, the gross profit margin is relatively high, in which the gross profit margin of domestic sales is expected to reach 70%, close to the gross profit margin of pharmaceutical preparations.

Jihua Biomedical rose 1.69 per cent to HK $0.60 yesterday.