Incidents:
On the evening of October 24, the company released its three-quarter report. It achieved revenue of 905 million in the first three quarters, an increase of 26.67% over the previous year, and achieved net profit of 294 million yuan to the mother, an increase of 25.27% over the previous year. The third quarter achieved revenue of 258 million, an increase of 9.63% over the previous year; the net profit returned to the mother was 84 million, an increase of 13.03% over the previous year; net profit after deducting the return to the mother was 76 million, an increase of 8.95% over the previous year. The performance was slightly lower than expected.
Key points of investment:
Sales of APIs and customer peptides continued to grow, and Chengji Pharmaceutical fell short of expectations.
By product, Q3 APIs and customer peptides (overseas sales) achieved revenue of about 101 million yuan, an increase of 153% over the previous year: the company had GMP recertification factors last year, which led to a decline in overseas API sales in the third quarter of that year. Currently, API and customer peptides continued the trend of the first half of the year; domestic pharmaceutical Q3 sales were 122 million, an increase of 19.8% over the previous year; Q3 Chengji Pharmaceutical's performance fell short of expectations: device sales were 102 million, down 79% from the previous year, and pharmaceutical combination packaging was 23 million, down 31% from the previous year. Some peptide preparations require subcutaneous injections, and sales of injectors by Chengji Pharmaceutical are expected to improve after Hanyu Pharmaceutical's formulation is marketed.
The three fees are at a reasonable level.
Q3 sales expenses were 102 million, an increase of 38% over the previous year, due to the promotion of formulations and low turnover and high operating expenses; management expenses were 25 million, an increase of 23% over the previous year. Financial expenses - 3.92 million, a year-on-year decrease of 2.36 million. In Q3, the company added 180 million dollars in long-term loans and 60 million in short-term loans, with subsequent interest expenses expected to increase.
Maintain a “Recommended” rating.
The company is a leading company in chemical synthesis of peptides. It has abundant product development reserves, domestic formulations+overseas APIs are gradually expanding, and we are optimistic about the company's development in the long term. Chengji Pharmaceutical's short-term performance fell short of expectations, and the company's performance expectations were lowered accordingly. The 2018-2020 EPS is expected to be 0.47 yuan, 0.60 yuan, and 0.74 yuan respectively. Corresponding to the closing price on October 24, PE is 22, 17, and 14 times, respectively, maintaining the “recommended” rating.
Risk warning
Product development falls short of expectations; pharmaceutical sales fall short of expectations; risk of impairment of Chengji Pharmaceutical
