The proportion of APIs continues to decline:
In 2012, the company recorded a turnover of 856 million yuan, a decrease of 20.8% over the same period last year, and a net profit of 114 million yuan, a decrease of 21.7% over the same period last year. The decrease in turnover and profit was mainly due to a decline in sales of the company's cephalosporin intermediates, APIs and powder injections compared with the same period last year. Due to the influence of antibiotic policy, the company has taken the initiative to reduce the sales of cephalosporins and intermediates. The proportion of intermediates and APIs has fallen to 44% in 2012. Specialist drugs accounted for 38% of the total sales, reaching 330 million yuan. The company's gross profit margin rose 4.3 percentage points year-on-year to 37.9%, and is expected to continue to rise as the proportion of specialist drugs continues to rise in the future.
Specialist pharmaceuticals business is growing strongly and has become a major source of profits:
In terms of specialist drugs, the company has increased its promotion and sales, and continues to grow rapidly throughout the year. At present, specialist drug business has become the company's main source of profit. The production and sales of the company's key promotional variety "Annexi" (losartan potassium hydrochlorothiazide tablets) increased by 68.1% and 49.4% compared with the same period last year, while the production and sales of "Lei Yi de" (entecavir dispersible tablets) increased by 152.5% and 120.9% compared with the same period last year. As antibiotic drugs can provide limited profits for the company at present, specialist drugs are basically the main source of profits for the company.
Annezhen entered the base drug, and sicovir benefited from haze:
The company's main product safety series in the leader "an Neizhen" (amlodipine benzenesulfonate) into the new version of the base drug catalogue. The company has put 5mg into the grass-roots market of retail pharmacies and community clinics two years ago, and the grass-roots market has been growing slowly recently. At present, it mainly depends on the growth of the mid-market. After entering the base drug, the company will use differential positioning, with different specifications to promote in different markets, future growth is expected. The company's anti-hepatitis B drug Lei Yi de (Entecavir) has developed rapidly in the past two years, and its domestic competitors are mainly Bristol-Myers Bristol-Myers Squibb Co and Sino Biopharmaceutical. In 2012, Leyde's sales increased by 70% to 77 million compared with the same period last year, and it is expected that there will still be a high growth rate in 2013. sales of more than 100 million are highly likely. The anti-allergy drug sicovir benefits from the severe weather and strong demand for haze in northern China. It is expected to break the momentum of slowing growth in recent years and return to high growth in 2013.
Continue to implement the high dividend policy:
For a long time, the company's dividend payout ratio has been maintained at around 40%. In 2012, the company paid an interim dividend of HK $0.015 per common share and proposed a final dividend of HK $0.055 per common share, with a dividend yield of about 40 per cent.
Target price of HK $3.1 to maintain the buy rating:
Taking into account the average valuation of the pharmaceutical API industry and specialist pharmaceutical industry, as well as the company's compound growth rate in the next few years, we give the company a target price of HK $3.10, which is equivalent to 15 times PE in 2013, which is 49 per cent higher than the current price.