Company profile:
The company, formerly known as Hainan Lingkang Pharmaceutical Co., Ltd., founded in 2003, is mainly engaged in the research, development, production and sales of prescription drugs of Chinese medicine. There are many varieties with the highest market share in the fields of parenteral nutrition, anti-infection and digestive system.
Before this issue, Tao Lingping and Tao Linggang controlled 100% of Lingkang Holdings, while Tao Lingping and Tao Linggang directly and indirectly controlled 81% of the company.
Current situation and prospect of the industry:
The chemical preparation industry is growing steadily. According to CFDA statistics, from 2007 to 2013, the sales value of China's pharmaceutical industry grew at a compound annual rate of 22.03%, and the proportion of the total output value of the pharmaceutical industry in GDP increased from 2.53% to 3.97%. The sales output value of the chemical preparation industry in 2013 was 573.1 billion yuan, ranking first in the sales value of various sub-industries of China's pharmaceutical industry, accounting for 26.2% of the total sales value of the pharmaceutical manufacturing industry. From 2007 to 2013, the sales value of China's chemical preparation industry grew at a compound annual growth rate of 20.83%.
Highlights of the company:
The products are diversified and the market share of some drugs is high. The diversification strategy of products is the strategic choice for the company to resist market risk and policy risk. By the end of January 2015, the company had obtained a total of 180 drug production approval documents for 84 preparation varieties, and another 27 new drugs and 117 generic drug varieties were in the process of applying for clinical approval or production approval. Alanyl glutamine for injection is the company's largest parenteral nutrition product, which has been listed in category B of the national medical insurance catalogue and the new rural cooperative medical catalogue of some provinces and cities. according to the statistics of the Southern Institute, the company's market share of alanyl glutamine for injection was 24.83% in 2013, ranking second in the industry, slightly lower than Sichuan Kelun Pharmaceutical Co., Ltd., surpassing the market share of the original research manufacturer Fessen Yuskabi Pharmaceutical Co., Ltd. According to the statistics of Nanfang Institute, the overall market size of cefmonate sodium in 2013 is about 2.151 billion yuan, accounting for about 2% of China's antibiotic market share. In 2013, the market share of cefmondol sodium for injection produced by the company was 14.41%, ranking third in the market. Yanhuning injection is listed in several local base drugs or health insurance catalogues. According to the statistics of the Southern Institute, the overall market share of Yanhuning injection in China in 2013 was about 1.117 billion yuan, and the market share of Yanhuning injection produced by the company was 24.26%, ranking second in the market share. The digestive system drugs produced by the company include omeprazole sodium for injection, pantoprazole sodium for injection, etc., among which omeprazole sodium for injection is the company's largest sales of digestive system drugs, and this product has been included in the "national essential medicine catalogue". At the same time, it has been listed in category B of the national health insurance catalogue. According to the statistics of Nanfang Institute, the market share of omeprazole sodium for injection produced by the company in 2013 was 10.92%, second only to Jiangsu AstraZeneca PLC (Wuxi) Pharmaceutical Co., Ltd., and Jiangsu Osaikang Pharmaceutical Co., Ltd., ranking third in the market.
Fund-raising project
1. It is proposed to raise 269 million yuan for the construction project of freeze-dried powder injection production line.
2. It is proposed to raise 117 million yuan for the construction project of powder injection production line.
3. It is proposed to raise 101 million yuan for the pharmaceutical logistics center project.
4. It is proposed to raise 94 million yuan for the R & D center construction project.
5. It is proposed to raise 38 million yuan for marketing network construction projects
6. It is proposed to raise 67 million yuan for the ERP system construction project.
7. It is proposed to raise 18 million yuan to supplement the working capital.
Main potential risks
1. The risk of drug price reduction. According to the current policy, the maximum retail price of drugs entering the health insurance catalogue at all levels is limited by the department in charge of prices. The National Development and Reform Commission has reduced drug prices for many times since 1998. In the future, with the deepening of medical and health system reform and medical insurance system reform, a large number of drug prices will still show a trend of price reduction. There is downward pressure on the price of the company's existing products, which may affect the performance of the company.
2. The risk of price change of raw materials. The company's raw materials are mainly API. Once the price of APIs rises and the price of the company's products remains unchanged, the gross profit margin of the products will decline, which will adversely affect the company's operating performance.
Valuation
The issuer works in the pharmaceutical manufacturing industry. As of May 15, 2015, the average static price-to-earnings ratio of the industry released by China Securities Index Co., Ltd. was 58.33 times. It is estimated that the company's earnings per share in 2015 and 2016 are 0.65 yuan and 0.74 yuan respectively. Considering the current market conditions, combined with the company's issue price of 11.70 yuan (corresponding to 22.98 times diluted price-to-earnings ratio in 2014), the initial stock price pressure of the company is expected to be 27 yuan-33 yuan.