Major asset restructuring approved to enhance market confidence
The company issued an announcement on the evening of August 1, 2016, and the company received the approval reply of the Securities Regulatory Commission on approving the issuance of shares by Xinjiang Baihuacun Co., Ltd. to purchase assets and raise matching funds from Zhang Xiaoqing and other issues. approved the company to issue a total of 100458816 shares to purchase related assets; approved the company to issue no more than 97576544 new shares to raise matching funds for the purchase of assets. We raised the target price to 24.00 yuan to maintain the buy rating.
Support the main points of rating
Major asset restructuring was approved, boosting market confidence. In March 2016, we launched the first in-depth report of the company in the market, "Baihua Village: opening up a New Route of Medicine, reviving the Sail of Revitalization", which mentioned that "the company is optimistic about the future development prospects of the pharmaceutical industry and plans to restructure its major assets." buy assets with low profitability and inject high-quality pharmaceutical assets into Nanjing Huawei Pharmaceutical, which opened the curtain of the second transformation. " There is concern in the market that under the environment of increasingly stringent verification of restructuring by the CSRC, the company's asset restructuring is at risk of not being approved. The approval of this major asset restructuring eliminates market concerns, and the company buys coal and other businesses with weak profitability and uncertain development prospects, and injects Huawei pharmaceutical assets not only bring more than 100 million yuan of net profit assets to listed companies, but also achieve the transformation of the main business of listed companies, which can fundamentally improve the operating conditions of the company.
The development of CRO industry is getting better, and we are optimistic about the future development of Huawei Pharmaceutical. Compared with foreign mature markets, China's CRO industry has the characteristics of small base and fast growth. The market size reached 22 billion yuan in 2006, with a compound growth rate of 33% from 2013 to 2013. In the past year, there have been frequent policies beneficial to the standardized development of the CRO industry: 1) stricter self-examination of clinical trial data has become the norm for long-term good R & D enterprises and CRO enterprises; 2) priority review and approval policies encourage enterprises to research and develop new drugs to strive for greater profit space, while the growth of the CRO industry lies in the research and development of new drugs, taking into account the rising cost of research and development, risk diversification and other factors, the penetration rate of CRO will continue to increase. 3) generics consistency evaluation gives rise to 10 billion market space, the first batch of 292 chemical oral solid base drugs need to be completed by the end of 2018, time is tight, and the task is heavy; 4) the transfer of R & D centers of pharmaceutical companies and the development of multicenter clinical trials promote the development of CRO industry. We are optimistic about the development of CRO industry for a long time.
Huawei Pharmaceutical specializes in preclinical research of new drugs. Since its establishment, it has developed nearly 250 preclinical projects, has more than 70 Chinese invention patents and 2 PCT international patents, and has built a tight intellectual property stronghold. The company has strong R & D strength and has a number of mature technology platforms, including chiral synthesis technology platform, controlled sustained release preparation technology platform, targeted drug delivery technology platform and so on. The company has established stable cooperative relations with many well-known enterprise groups and listed companies at home and abroad, and has high recognition in the industry and customers. In 2013,2014 and 2015, the net profit after deduction of Warwick Pharmaceutical was 16.4004 million yuan, 36.1302 million yuan and 46.7993 million yuan respectively, and the gross profit margin was stable at 78%. The company is in a period of rapid development. According to the performance commitment, the net profit from 2016 to 2018 will be no less than 100 million yuan, 123 million yuan and 147 million yuan respectively, while the cumulative net profit in the above three years will not be less than 370 million yuan, greatly improving the operating situation of Baihua Village.
Main risks faced by rating
The research and development of Huawei Pharmaceutical failed, and the results of research and development could not be transformed in time.
Valuation
Taking into account the trend of the CRO industry and the high growth of Warwick Pharmaceutical, according to Warwick Pharmaceutical's performance commitment, it is expected to earn 0.28 yuan per share in 2016, maintaining the buy rating, and the corresponding target price will be raised from 22.40 yuan to 24.00 yuan.
