The potential market space of new activin is more than 3 billion, and the rapid release volume exceeded expectations after it was included in health insurance in 2017.
There are about 2 million cases of acute heart failure in China every year. Xinhuo, as a rescue drug for acute heart failure, is suitable for more than 90% of patients. 1.18 million units were sold in 2018, with a permeability of only 10%. Assuming that in the next few years, the utilization rate of Xinhuo has gradually increased to 35%, the corresponding market volume is more than 6 million, and the corresponding amount is 3.6 billion yuan. In July 2017, Xinhuo entered health insurance by reducing its price by about 40% through high-priced drug negotiations, solving the dilemma that the unit price of the product was too high and that health insurance could not be reimbursed. After being included in health insurance, Xinhuo began to release sharply in 2017, and the sales volume of Xinhuo in 2017, 2018 and 2019H1 increased by 67%, 91% and 66% respectively compared with the same period last year, significantly exceeding market expectations. At the same time, in 2017, Xinhuo made up for the impact of a sharp drop in ex-factory prices by 67%, and there was no decline in revenue and net profit caused by the sharp price reduction feared by the market. In 2018, Xinhuo sales continued to grow by 91%, achieving an income of close to 600 million yuan. if asset impairment is not taken into account, operating net profit of 300 million yuan has been achieved in 2018, an increase of 31% over the same period last year. The level of net profit reached a previous historical peak.
2019 was the inflection point of the company's performance, and the new activity of 2019H1 increased by 66% over the same period last year.
In 2019, H1, Xinhuo sales continued to maintain a high growth rate of 66%. Data such as IMS and PDB show that hospital terminal Xinhuo sales are also growing by 50%, and are expected to achieve high growth of more than 50% for the whole year, and continue to maintain rapid growth in the next few years (year-on-year growth of 53%, 43%, 40% in 2019-2021), driving the company's revenue and net profit to maintain more than 30% compound growth in the next few years. As the impairment of the company's assets in 2018 exceeds 85 million, the growth rate of the company's net profit on the balance sheet in 2018 is relatively low. From 2019, the company will show an apparent inflection point in performance. Apparent net profit is expected to increase by 76% (deducting non-operating net profit by 38% compared with the same period last year).
The continuous buyback shows the company's confidence that only 16 times the 2020 valuation of 2019 will give "strong recommendation".
From April 26 to July 31, 2019, the total number of shares repurchased by the company was 2.52 million shares, the repurchase amount was 85 million yuan, and the average repurchase cost was 33.72 yuan per share, demonstrating the company's confidence in future development. We estimate that the company's revenue will be 1.378 billion / 1.814 billion / 2.366 billion yuan in 2019-2021, an increase of 34% in 1919-2021, with a year-on-year increase of 34%, 32%, 30%, and 380 million / 508 million / 672 million, respectively, and a year-on-year increase of 76%, 34%, 32%, and 2021, respectively, with PE significantly less than 1 in 16-12-9. Considering that the company's performance will maintain a compound growth rate of more than 30% in the next few years, the company will be given a "highly recommended" rating for the first time.
Risk tips: new activating sales growth is lower than expected; new actives further reduce prices; Imdo sales are lower than expected; declining sales of other products are a drag on the company's performance; goodwill impairment risk.
