Events:
On October 28, 2019, Haixiang Pharmaceutical (002099) released its quarterly report that the company achieved an operating income of 2.376 billion yuan from January to September, + 15.11% from the same period last year, and a net profit of 690 million yuan, + 42.87% from the same period last year, deducting 674 million yuan from non-net profit, + 40.99% from the same period last year. Among them, the operating income in the third quarter was 643 million yuan,-7.84% compared with the same period last year, the net profit was 194 million yuan,-6.21%, and the non-net profit was 191 million yuan,-7.42%.
1. In terms of dye business, the price is close to the bottom.
Dye prices in the third quarter downward trend, of which KNR's external offer has dropped from 200,000 yuan / ton in June to 160,000 yuan / ton in October, mainly due to sluggish demand under the influence of trade war and other factors, and the northeast, Inner Mongolia and other new production capacity gradually put into production, dyes enter the downward cycle under the imbalance between supply and demand.
From the perspective of various dyestuff sub-industries, we are most optimistic about the anthraquinone series dyes represented by KNR, which have many production links, complex processes and higher barriers to integrated production, so they also enjoy a higher profit level.
In fact, if you look back at 2013-2016, that is, before this round of supply-side reform, the normal gross profit margin of anthraquinone dyes represented by Haixiang and Yabang is basically more than 50%, which is 15-20pct higher than that of dyes as a whole. If the cost of KNR is about 80,000 yuan / ton, 140000 / ton is basically the limit low of KNR, so we think that anthraquinone will reach the bottom before other dyes.
two。 The pharmaceutical business is growing steadily.
Peinan series of APIs represented by the company continues to be in high prosperity. The price of Pei Nan core intermediate 4-AA has reached 1800 yuan / kg. The company relies on Taizhou quality Medical Park to undertake more domestic and foreign orders, and the product layout has gradually shifted from early anti-infective products to cardiovascular, metabolic, mental illness and immune products, with long-term growth expected.
Main points of investment:
Medicine and dyestuff dual main industry development, strong profitability. The company's main business is divided into two parts: medicine and dye. The pharmaceutical sector is mainly engaged in the production and sales of characteristic intermediates, APIs and related preparations, as well as international pharmaceutical CDMO/CMO professional services. The products cover many fields such as anti-infection, cardiovascular, mental illness, metabolism and immunity. Dye plate is mainly engaged in the production and sales of environment-friendly reactive dyes, dye intermediates and pigment intermediates, and the products are mainly reactive brilliant blue KN-R dyes. In 2018, the company realized operating income of 2.719 billion yuan (yoy+17.74%) and net profit of 605 million yuan (yoy+76.79%) belonging to the parent company. Among them, the pharmaceutical sector realized operating income of 1.469 billion yuan (yoy+13.24%) and net profit of 199 million yuan (yoy+55.13%), while the dye sector realized sales income of 1.25 billion yuan (+ 23.51%) and net profit of 406 million yuan (yoy+89.82%).
Optimize the structure of pharmaceutical products and expand international customized cooperation business. The pharmaceutical business of Haixiang Pharmaceutical is mainly engaged in the production and sales of characteristic raw materials and preparations, as well as providing customized production and supporting R & D services for international pharmaceutical enterprises. The company maintains good cooperative relations with international well-known pharmaceutical companies and has cooperated with Pfizer Inc for more than ten years. It is the only strategic partner of German BII in China. The company's Peinan series, clindamycin series and florfenicol series have absolute advantages in scale, quality and technology in the market, and are in the leading position in the industry. In 2018, by strengthening internal management, reducing costs and increasing efficiency, the company continued to consolidate the market share of leading products such as clindamycin series and Pei Nan series, and the profitability of the pharmaceutical sector was stable.
The variety and output of dye products will be expanded, and there will be more room for growth in the future. Haixiang Pharmaceutical reactive brilliant Blue KN-R is in a leading position in the field of high-end reactive dyes, has an absolute say on its price, and its downstream customers are stable. At present, Taizhou Qianjin Phase I and Phase II reactive brilliant Blue KR-N have been put into production with a total production capacity of 15000 tons. Due to the strictness of environmental protection in 2018, the price increase performance of the company's dye products has expanded. In the future, the company will comply with the general trend of the upgrading of the dye industry, extending from a single anthraquinone series of reactive blue dyes to more than 10 reactive blue dyes such as methylene reactive blue and fluorinated reactive blue, as well as other color series reactive dyes and acid dyestuff products, helping to enhance the ability to cope with market risks, while expanding the company's competitive advantage in the field of high-end dye segments and market share.
Profit forecast and investment rating: give a "buy" rating. With the rapid development of the pharmaceutical sector of the company, the new production capacity of the dye sector is about to be put into production and is expected to bring new profit growth points. considering that the dye price is in the downward cycle, the profit forecast is reduced slightly, and the EPS from 2019 to 2020 is expected to be 0.58,0.74 and 0.89 yuan, corresponding to PE12.10, 9.38 and 7.81 times. In the long run, the company's pharmaceutical and dye business has higher barriers and more room for growth, maintaining the "buy" rating.
Risk tips: intensified competition in the pharmaceutical industry; resumption of production by competitors in the dye industry; lower-than-expected downstream demand, downward risks in dye prices; safety and environmental protection production risks; impact of RMB exchange rate fluctuations on the company's performance.
