Main points of investment
The performance continued to grow strongly: the company's operating income in 2019 was 6.224 billion yuan (the same below), an increase of 147.9% over the same period last year; the net profit was 1.919 billion yuan, an increase of 103.6% over the same period last year; if the impact of convertible bonds was not taken into account, the adjusted net profit was 2.096 billion yuan, an increase of 122.4% over the same period last year.
Diversified sales channels contribute to the sustained growth of Kewei: the company's products currently cover more than 2000 tertiary hospitals, more than 8000 secondary hospitals and 100000 primary health care institutions. With the continuous promotion of the channel sinking strategy, the grass-roots market is expected to further open. In addition, the company has made a significant breakthrough in the expansion of OTC channels through cooperation with Kyushu Tong, and also cooperated with Alibaba Health Information Technology, China Resources Commercial and other well-known online operators, which is expected to open up online sales channels.
Kewei relies on its multi-dimensional advantages and is not afraid of competition in the short term: at present, a number of companies are developing oseltavir imitation pharmaceuticals, which are expected to be listed in the near one or two years at the earliest. Considering that the annual flu season is in short supply, the impact of new capacity injection into the market on product prices can still be controlled. At the same time, it is less likely to purchase oseltamivir in the short term when it is impossible to ensure that the production capacity meets the market demand.
With the arrival of the trend of new products on the market, optimize the product pipeline: three products won the bid in the second batch of volume procurement, which will bring revenue increment for the company. Of the 33 chemical generic drugs recently introduced, 5 have been approved for production, 26 are in the market application stage, and a number of products are expected to be approved in 2020. In addition, the company's anti-hepatitis C drugs, insulin products, non-insulin hypoglycemic drugs and other products are also on the eve of the market. With the continuous listing of new products, the company's revenue structure will continue to be optimized.
Profit forecast and valuation: taking into account the impact of the epidemic on the company's clinical trial, new product launch progress, business development, etc., we lowered our forecast revenue for 2020-2021 to 80.35 and 9.195 billion yuan, and 2022 to 10.146 billion yuan. Year-on-year growth of 29.1%, 14.4% and 10.3%, respectively, by 3.5% and 10.9% in 2020-2021 The projected net profit for 2020-2021 was lowered to 24.72 yuan and 2.845 billion yuan, and the projected net profit for 2022 was 3.161 billion yuan, up 28.8%, 15.1% and 11.1% respectively from 2020 to 2021. Maintain the target price of HK $61.0, corresponding to the price-to-earnings ratio of 11.06,9.69 and 8.77 times earnings for 2020-2022, respectively, with a 20PEG of 0.51, maintaining a "buy" rating.
Risk hints: the impact of the epidemic exceeded expectations, market competition intensified, new product sales did not meet expectations, and the risk of influenza incidence decreased.