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【东吴证券】海正药业:制剂销售走出低谷,在研产品进展顺利

東吳證券 ·  Oct 30, 2016 16:00  · Researches

Key investment events: The 2016 three-quarter report was released. From January to September of this year, the company achieved total operating income of 7.336 billion yuan, an increase of 9.37% over the previous year; net profit of 164 million yuan, an increase of 83.84% over the previous year; and net profit attributable to owners of the parent company was 31 million yuan, an increase of 599.64% over the previous year. Pharmaceutical sales have broken out of a trough: revenue for the third quarter was 2,606 billion yuan, up 18.66% year on year. The year-on-year growth rate for the first two quarters was 1.10% and 8.95%, while revenue in 2015 fell 13.17%. The sales growth rate of Haizheng's own pharmaceuticals has accelerated, and anti-tumor drugs and anti-infective drugs have achieved rapid growth. Benefiting from the restoration of sales channels, the growth rate of antineoplastic drugs is over 50%. Sales of the blockbuster product Ambainuo are expected to gradually increase; Himexin will also continue to grow rapidly; it is difficult for the company to contribute in the short term, and it will be difficult for the company to contribute in the short term, and it will return to the highest level of 35% in 2017. The company's preparations, irbesartan tablets and irbesartan hydrochlorothiazide tablets, were approved by the US FDA, which can become the company's new pharmaceutical sales growth points. In terms of APIs, the negative impact of the FDA's import warning letter continues, and the export of APIs is still being hit to a certain extent. The high balance ratio has abated, and the financial situation remains under pressure: the company's balance ratio was 59.32%, up 1.94% from the end of last year. Finance expenses increased 31.47% year over year. As a result, companies are under short-term and long-term financial pressure. In order to improve the capital structure and reduce risk, the company plans to apply for the issuance of financial direct financing instruments with an amount of not more than 1 billion yuan; it plans to sign a capital increase of 177 million yuan with the China Development Fund; it is preparing a non-public offering to raise capital of no more than 1.17 billion yuan. The price of the issued shares is 1,300 yuan per share, mainly for loan repayment. The company's management employees actively subscribed. Among them, Chairman Bai Hua subscribed 11.11%. It is believed that the company's high balance ratio can be mitigated, while also demonstrating management's confidence in the future development of the company. Overseas investment yielded products, and products under development progressed smoothly: during the reporting period, the company signed a patent licensing contract for the anti-influenza virus drug “fapiravir” with Japan's Fujifilm to obtain its rights in mainland China; the company signed a technology transfer agreement with Nascent Biology to obtain the right to develop and commercialize Pritumab, a whole-human monoclonal antibody for epithelial cancer (launched clinical phase I in 2017) in mainland China; the company signed a technology transfer agreement with Celsion, a genetic immunotherapy product for ovarian cancer, and the company is responsible for its clinical samples. and subsequent production of commercial products. The company's Class 1.1 innovative drug, DTRMHS-07, was approved for clinical trials. DTRMHS-07 will be used to treat autoimmune diseases such as rheumatoid arthritis. XELJANZ, a drug with a similar mechanism of action, had global sales of over US$564 million in 2015; another class 3.1 drug, sofosbuvir, also received approval for clinical trials. At the same time, phase III clinical trials of HS-25, a single drug and joint trials of the cholesterol absorption inhibitor under development, have been fully advanced; the US and China have completed phase I single administration of AD-35 for Alzheimer's disease; and phase I clinical trials of the photosensitizer HPPH have entered the final stage. The development of a number of major products has progressed smoothly, laying a solid foundation for the company's transformation, and there is plenty of room for growth in the future. Profit forecast and investment advice: The company's operating income has rebounded, and the major products under development guarantee the company's future growth momentum. Therefore, we expect the company's EPS from 2016 to 2018 to be 0.047, 0.26, and 0.44, respectively, and the corresponding PE is 302 times, 55 times, and 32 times, respectively, giving an “increase in holdings” rating. Risk warning: risk of drug policy price reduction; risk of new drug development.

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