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海正药业(600267):低点已过 拐点将临

Haizheng Pharmaceutical (600267): The low point has passed and an inflection point is approaching

太平洋證券 ·  Apr 23, 2019 16:00  · Researches

Event: the company released its 2018 annual report, realizing operating income of 10.187 billion yuan (- 3.63%), net profit of-492 million yuan (- 3730.15%), and net profit of-612 million yuan after deducting non-profit. At the same time, the quarterly report for 2019 was released, with operating income of 2.798 billion yuan (- 0.86%), net profit of 31.7314 million yuan (194.06%), and net profit of 25.4241 million yuan after deduction.

The income decreased slightly, and the amount of biomedicine release was obvious.

The company achieved an operating income of 10.187 billion yuan (- 3.63%), mainly due to the fact that after the comprehensive promotion of the two-vote system, Hanhui Pharmaceutical changed the resale business of Pfizer Inc purchased by Ruihai into Pfizer Inc direct sales, and the way of revenue recognition changed. Part of Pfizer Inc injected products into the collection of promotion service fees, the scale of income became smaller, reflected in the reduction of report income and the decline of distribution and raw materials business of provincial pharmaceutical companies. The loss of 492 million yuan in 18 years is mainly due to: 1) the ban on raw materials has not been lifted in the European Union, the pressure on customers to change suppliers has increased, and the market sales of pharmaceutical administration have declined significantly; 2) the impairment of Q4 assets in 18 years, including the suspension or suspension of development of some R & D capitalization projects, and the confirmation of expense in the current period. Stop the follow-up construction of individual production lines that are not in line with market demand, and provide for the impairment of relevant long-term assets in this period. the total net profit was reduced by 164 million yuan; 3) the management expenses and R & D expenses increased significantly; 4) compared with 17 years, there was no Pfizer Inc product compensation income for 18 years, which reduced the income by 101 million yuan; 5) with the progress of the project in progress and the carry-over of fixed assets, the interest on the loan increased significantly.

According to the business segment, Hanhui Pharmaceutical has an income of 3.819 billion yuan (- 4%) and a net profit of 529 million yuan (+ 8.2%). Sales of other major varieties of methylprednisolone sodium succinate, methylprednisolone tablets, up to one and sirolimus tablets increased by 11%, 15%, 43% and 19%, respectively. In the past 18 years, Hanhui Pharmaceutical has obtained the exclusive promotion rights and interests of three inhalers from Novartis in the Chinese market, Montester Sodium as the agent of Ambisen Pharmaceuticals, and won the agency of Fudan Zhangjiang doxorubicin liposomes. The company's product line is rapidly rich, and its value will be gradually reflected as a scarce and standardized CSO platform.

In other aspects of business, Abercrombie Line sold 334000 units (+ 417%) quickly after it was approved, and Baiying Pharmaceutical earned 107 million yuan. The sales income of the API business is 1.508 billion yuan (- 0.79%) and the gross profit is 285 million yuan (- 33.64%). The higher gross profit is expected to be mainly due to the decline in product revenue in the standardized pharmaceutical market with high gross margin, of which Haizheng Nantong lost 78.028 million yuan, 59.481 million yuan more than in 17 years. The income of the pharmaceutical commercial subsidiary is 4.098 billion yuan (- 20%), and the net profit is 30.6756 million yuan (+ 5%).

The management and R & D expenses increased slightly, and the sales expenses increased significantly under the influence of the two-vote system.

In 2018, the sales cost was 2.514 billion yuan (+ 57.22%), mainly due to the full implementation of the two-vote system, the increase in revenue from preparation sales and the corresponding increase in sales promotion expenses; the sales expense rate was 24.67%, with an increase in 9.55pct. The management cost is 729 million yuan (+ 17.83%), and the management expense rate is 7.16%. The increase in 1.31pct is mainly due to the increase in fixed expenses such as depreciation and amortization, operating management expenses and personnel compensation expenses. The R & D cost is 640 million yuan (+ 45.53%), mainly due to the increase in the cost of conversion fees due to the previous capitalization of some suspended or terminated projects after combing the projects. The financial cost is 407 million yuan (+ 31.18%), which is mainly due to the conversion of part of the interest expenditure to cost accounting with the advance and consolidation of the project under construction.

Biological drugs and small molecular innovative drugs have entered the harvest period.

In 2018, a total of 1.034 billion yuan was invested in R & D, accounting for 10.15% of the sales revenue, an increase of 22.47% over the same period last year. In terms of biopharmaceuticals, Adamumab submitted for marketing and was included in the priority review, which is expected to be approved within this year; infliximab, trastuzumab, rituximab, insulin glargine and insulin aspartate have all entered the clinical III phase and are nearing harvest. In terms of small molecular innovative drugs, Haizemibu submitted an application for marketing and was included in the priority review; AD-35 has completed phase I clinical trials in China and the United States, and phase II small-scale clinical trials have begun in the United States; the GCK project has completed phase I clinical studies and started phase II clinical studies; and the HPPH project has entered the second phase of clinical trials. In terms of imitation pharmaceuticals, a total of 2 varieties and 5 specifications passed the national generic drug consistency evaluation, 9 products completed the declaration, and 4 varieties and 7 product regulations obtained production approval documents. In the future, the company will pay more attention to the integration of R & D system and project control, and R & D efficiency and output will be gradually improved.

19Q1 deduction is not profitable, the inflection point is reduced to

19Q1 realized operating income of 2.798 billion yuan (- 0.86%), net profit of 31.7314 million yuan (194.06%), and net profit of 25.4241 million yuan after deducting non-profit. From a split point of view, the gross profit of 19Q1 is 1.214 billion yuan (+ 25%), which is faster than the income, which is mainly due to the rapid growth of high gross profit business such as Hanhui Pharmaceutical and Biopharmaceuticals. Various expenses are well controlled, and the growth rates of sales expenses, management expenses, R & D expenses and financial expenses are 22.59%, 6.15%, 3.18% and 3.79% respectively, all lower than the growth rate of gross profit. Since taking office, the new management of the company has focused on strengthening the internal management system, which has achieved initial results and achieved profits after deducting non-profits, marking the coming of the inflection point of the company's performance.

Valuation and investment advice-the former king, the inflection point of history!

The company's business and management are expected to usher in a historic inflection point: 1) after the entry of Hillhouse Capital to optimize management, using the mature CSO model to continue to grow through the introduction of varieties, Hanhui Pharmaceutical profits are expected to grow rapidly in the follow-up; 2) the value of the biopharmaceutical sector is seriously undervalued. After the expansion of production, Adamumab has been reported for production and is expected to be approved in Q4 in 190.A number of biological drugs have entered the clinical III phase, which is close to the harvest time. 3) the clinical data of the chemical innovative drug Haize Maibu III phase is good, has been declared for production and has been included in the priority review. 4) the number of generic drug approvals is large, and there is no stock, and the production capacity is large. Benefiting from the national collection and acquisition policy, it can give full play to the advantages of the integration of API preparations, and is expected to make full use of fixed assets and cover depreciation expenses. 5) in the future, the company will reduce unnecessary construction projects and improve R & D efficiency, dispose of idle assets and non-core projects, highlight the main industries such as biopharmaceuticals, preparations and APIs, and strengthen the construction of internal control system. It is expected that the company's subsequent debt ratio-financial expenses are expected to gradually decline, production / management costs continue to reduce, and profits will be gradually released. In the first quarter of 1919, the company made a profit after deducting non-profits, which marked the arrival of the inflection point of the company's performance.

Haizheng Pharmaceutical Company has a reasonable valuation of 20 billion yuan in 19 years (Hanhui 7 billion + biological drug 10 billion + chemical drug-1 billion + raw material drug 3 billion + commercial 500 million). Where:

1) Hanhui Pharmaceutical 7 billion: the 20-year net profit is estimated to be 661 million yuan, an increase of 25%, 22%. Haizheng Pharmaceutical holds 51% equity, and the net profit of equity is 337 million yuan. Based on 20 times PE in 19 years, the corresponding valuation is 7 billion yuan.

2) Biopharmaceuticals 10 billion: with reference to the valuation of similar enterprises such as Fuhong Hanlin and INNOVENT BIO, Haizheng Biology (100% equity) will be the domestic leader in biological medicine for autoimmune diseases (rheumatoid, etc.), with a complete product line and a leading progress of the varieties under development. has a professional sales and promotion team with a valuation of about 8 billion yuan; the insulin plate is valued at 2 billion yuan, with a total valuation of 10 billion yuan.

3) the conservative valuation of chemical drugs is 5 billion (product line valuation + asset valuation based on fixed assets), deducting 6 billion liabilities (caused by fixed assets investment),-1 billion valuation: the existing varieties still have great growth potential, the net profit in 18 years is 200 million, more than 50 generic drug varieties are reported, covering large varieties, the beneficiary countries are collecting, and 15 innovative drugs are being researched and developed, among which the clinical data of Haize Maibu phase III is good. Years of R & D investment results began to show, in the research product echelon (generic drugs, innovative drugs) is good, plus fixed assets investment of 5 billion, a total conservative valuation of 5 billion yuan Chemical drug debt is estimated at 6 billion, after deduction,-1 billion valuation. Subtraction is being done: selling approval documents and selling fixed assets.

4) API 3 billion: net profit of 2000-30 million yuan in 2017, EU certification is expected to be re-passed, high gross margin standardized pharmaceutical market revenue rebounds to increase profitability. The normal net profit before FDA and EU ban is more than 300 million yuan. The company is expanding to develop the domestic market and undertake CMO business, and begin to sell some of its production capacity. According to 10 times PE, the valuation is 3 billion yuan; subtraction is being done: selling fixed assets.

5) Pharmaceutical business 500 million yuan: the net profit in 2018 is 31 million yuan, which is expected to maintain steady growth and a reasonable valuation of 500 million yuan.

18 years is the year of performance adjustment, 19 years is expected to begin to release performance, the company is expected to achieve annual net profit of 103 million yuan, 372 million yuan and 672 million yuan in 19-20-21, respectively, and EPS of 0.11,0.39 and 0.70 yuan respectively. The company ushered in the management-operation double historical inflection point, the current market value is seriously undervalued, 19 years reasonable valuation of 20 billion yuan, to maintain the "buy" rating.

Risk tips: national collection of rapid and comprehensive promotion of the risk; management is not straightened out; depreciation of fixed assets-too much financial expenses affect performance and so on.

The translation is provided by third-party software.


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