Main points of investment
Event: the company released its 2019 semi-annual report, with operating income of 456 million yuan, an increase of 33.51% over the same period last year, net profit of 53 million yuan, an increase of 29.68% over the same period last year, non-net profit of 51 million yuan, an increase of 29.65% over the same period last year, and operating cash flow of 25.5353 million yuan, down slightly by 3.87%.
In the first half of the year, key products are in full bloom: the growth of the company's 2019H1 revenue mainly comes from several core products that have been listed, and the sales of these varieties have maintained a good momentum of growth. Of this total, sales of Torasemide were 186 million yuan, up 33.55% over the same period last year; sales of antibiotic products totaled 122 million yuan, up 39.51% over the same period last year; sales of adenosine monophosphate and ganciclovir in antiviral drugs were 15.731 million yuan and 15.4771 million yuan respectively, up 31.24% and 34.76% year-on-year Due to the maintenance of matching injection water manufacturers, clinical use monitoring and other reasons, sales of the digestive drug lansoprazole were 28.3478 million yuan, down 22.10% from the same period last year, and it is expected to return to the normal level after production resumes. From the expense side, 2019H1's sales expenses reached 265 million yuan, an increase of 26.99% over the same period last year, mainly due to the company's continued efforts to strengthen the marketing of key products. The sales expense rate is 58.19%, which is slightly lower than that of the same period last year, but it is still at a high level, there is room for further improvement, and the performance is expected to be thickened after cost control. From a quarterly point of view, 2019Q1 and Q2 achieved operating income of 211 million yuan and 245 million yuan respectively, deducting non-net profit of 21 million yuan and 30 million yuan, month-on-month data also continued to improve, the momentum of development is good.
The steady growth of core products is expected: the company's current revenue mainly comes from its own products, and the sales of these products in the next two or three years will still be the key factor determining the company's performance growth. (1) Torasemide: torasemide is the most widely used diuretic in clinic, with a market share of more than 50% all the year round. At present, a total of 9 enterprises have obtained the production approval of torasemide preparation. According to the statistics of the sample hospitals, Haichen Pharmaceutical's market share has been maintained at about 35% from 2014 to 2017, second only to Nanjing Youke. Nanjing Youke stopped production in 2018 due to technological problems, the company took this opportunity to quickly achieve the replacement of Nanjing Youke, the market share quickly increased to about 45%, ranking first, and is expected to maintain steady growth in the future. (2) antibiotics: the company's antibiotics mainly include cefotiam, tegacycline, cefmendol sodium and cefoxime. In the "limited resistance order"
Under the background, the antibiotic industry as a whole is affected to a certain extent, but we believe that antibiotics are the rigid demand for clinical treatment, the market scale will remain in the low growth range in the future, and the company's market share is still very small. with the strengthening of market promotion and the listing of new products, this business sector has strong growth potential. (3) Lansoprazole: lansoprazole is a new type of proton pump inhibitor, which is mainly used in the treatment of digestive tract diseases. In recent years, the company's market share has gradually increased, reaching about 20%, and the market competitiveness is gradually increasing. After production resumes, it is expected to return to the growth range.
Acquisition of NMS, marching into innovative drugs: the company has completed the acquisition of 90% of the equity of Italy's NMS Group in 2018 by United Village Capital and Dongcheng Investment. NMS Group is the world's top comprehensive R & D group dedicated to the field of tumor treatment, with four business segments: drug R & D, preclinical, clinical research services and customized drug R & D and production services. In recent years, NMS Group has established a long-term and stable cooperative relationship with large multinational pharmaceutical companies and biotechnology companies. at present, many varieties have been authorized to transfer, among which Encorafenib and Entretini have been approved to be listed on the market, and the company can receive patent license, milestone payment and sales commission after the product is listed. In addition, the company has a rich reserve of products under research, and the steady progress of the research and development of these projects is expected to help the company's performance to a higher level and formally realize the strategic transformation from "imitation-based" to "imitation-based combination".
Investment advice: we predict that the company's net return profit from 2019 to 2021 will be 1.09,1.45 and 171 million yuan respectively, an increase of 31.2%, 33.0% and 18.0% over the same period last year, and earnings per share will be 0.91,1.21 and 1.43 yuan respectively, corresponding to 33.0,24.8 and 21.0 times PE from 2019 to 2021. Based on (1) the steady growth of core generic drug varieties and (2) the increment of innovative drug research and development brought about by the merger and acquisition of NMS, the proposal of increasing holdings-An is given.
Risk hint: policy risk, R & D risk, market competition intensifies.
