Event
On the evening of August 23, the company released its 2018 semi-annual report. During the reporting period, the total operating income was 162.2696 million yuan, an increase of 8.04% over the same period last year. The net profit belonging to shareholders of listed companies was 3.9551 million yuan, a decrease of 84.13% over the same period last year. Net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses decreased by 85.06% compared with the same period last year.
Comment
Research and development investment continues to grow, and the global innovative drug GST-HG161 targeting anti-liver cancer drugs is expected to enter clinical trials in September. In 2018, H1 invested 61.5812 million yuan in R & D, accounting for 37.95 percent of its total revenue, a substantial increase of 25.7436 million yuan over the same period last year, an increase of 71.83 percent, of which capitalization expenditure was 23.3349 million yuan and expense expenditure was 38.2463 million yuan. In addition, GST-HG161, a global innovative anti-liver cancer targeted drug developed by the company, as a unique specific targeted inhibitor, has received a "notice of acceptance" from the State Drug Administration on July 24, 2018, and may successfully enter the clinical trial phase by the end of September. At present, the drug is the most effective liver cancer targeted drug with the same target as the disclosed efficacy research results, and has global intellectual property rights.
The proportion of direct sales of the company increased rapidly, and the sales of tenofovir were stable in the first half of the year. In 2018, H1 company continues to increase the development of direct sales terminals, increase the number of direct sales terminals, and further enhance the sales volume of the original direct sales terminals through effective academic promotion activities. In the first half of the year, the sales revenue of the direct selling model was 119.8511 million yuan, and the proportion of sales revenue increased to 73.86 percent from 59.85 percent in the previous year. In addition, the company achieved sales revenue of 25.4053 million yuan for Nofovir, accounting for 15.66% of the company's operating income, and sales were promoted smoothly.
Profit forecast
It is estimated that the operating income of the company from 2018 to 2020 is 4.06,5.60 and 750 million yuan respectively, and the net profit belonging to the shareholders of the parent company is 0.37,0.49 and 63 million yuan, equivalent to EPS0.26, 0.35,0.45 yuan per share, and the corresponding PE is 98.15,72.91,56.71 times respectively. Considering that tenofovir is in a period of market expansion, future revenue is expected to usher in high growth, while the company has high-quality R & D pipelines and continues to give "overweight" ratings.
Risk tips: slow market expansion of tenofovir; risk of new drug research and development; strategic benefits are not up to expectations.