Performance summary: the company achieved operating income of 5.67 billion yuan in the first half of 2019, an increase of 6.3% over the same period last year, and a net profit of 50 million yuan, an increase of 254.5% over the same period last year, of which the non-recurrent profit and loss dominated by government subsidies and the disposal of non-current assets was 47.17 million yuan.
The trend of income and performance recovery is obvious, and the gross profit margin has improved greatly. The realized income and homing profit of 2019Q2 were 2.87 billion and 20 million respectively, up 14.3% and 415% from the same period last year. 2019H1 achieved positive revenue growth, mainly due to positive growth in revenue from non-Haizheng drugs, with revenue growth of 8.8% and 5% year-on-year for Haizheng and non-Haizheng drugs, compared with 35% and-24% respectively in the same period in 2018. 2019H1 achieved a turnaround after deducting non-performance, mainly due to the high growth of the company's core varieties and the improvement of comprehensive gross profit margin. Sales of the core variety Ambano continued to grow steadily, with 2019H1 sales exceeding 240000 units, an increase of 162 per cent over the same period last year.
2019H1, the company's comprehensive gross profit margin was 46.1%, up 4.3% from the same period last year, the sales expense rate was 25.4%, 3.5% higher than the same period last year, and the management expense rate was 6.3%, 3.2% lower than the same period last year.
Step up research and development, and a number of blockbuster products are about to be approved. 2019H1, the company invested 190 million yuan in R & D, an increase of 0.2% over the same period last year. The company has a wide range of product gradients, from new drugs to generic drugs, covering anti-tumor, cardiovascular, anti-infection, anti-parasite, endocrine regulation, immunosuppression, liver and gallbladder protection and other fields.
In terms of early research and development, the company focuses on tumor immunotherapy and ADC drug layout combination products, of which three fully innovative antibody molecules are identified as candidate molecules to enter process development and preclinical research, and other clinical products such as aspartate insulin, infliximab and glargine insulin are progressing steadily as planned.
The company has made positive progress in R & D investment, and a number of large varieties have been declared to be on the market, including paclitaxel (albumin) binding type, Adamu monoclonal antibody and sea wheat cloth, three important products have been reported for production, and there is a high probability that they will be approved in the next year. The competition pattern of these three large variety industries is good, and after being approved, it is expected to become a heavyweight variety of class 1 billion, and it is the core variety that drives the company's rapid growth in the future.
Profit forecast and rating. It is estimated that the EPS of the company from 2019 to 2021 is 0.10,0.17,0.33 yuan respectively. At present, the company has three major varieties, including paclitaxel (albumin-bound), Adamu monoclonal antibody and sea wheat cloth, which are expected to be approved and sold in the next year, driving the company into a new track of rapid development. Although the company's current PE107 is much higher than the average PE level of comparable companies in the industry, as a traditional domestic mainstream pharmaceutical company, the company's omni-directional strength is still strong. With the successive approval of many large varieties, there is a lot of room for future performance improvement. Coverage for the first time, giving a "overweight" rating.
Risk hints: risks such as sustained large-scale impairment of fixed assets and poor progress of drug research and development.