Today, the company released 2020 Q1 results. The company's revenue was about 2.010 billion yuan, about 5.6% year on year; considering the impact of convertible bonds, the return to the mother was about 780 million yuan, about 0.7% year on year; excluding the impact of convertible bonds, the return to the mother was about 875 million yuan, about 9.3% year on year. The company's performance was in line with expectations, and Kewei grew steadily in the context of the pandemic.
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In the context of the epidemic, the company's performance was in line with expectations, and the core variety, was growing steadily: the company's performance did not take into account the impact of convertible bonds. It returned to the mother about 875 million yuan, about 9.3% over the previous year. Steady growth in the context of the epidemic was in line with expectations. We believe that the 2020 Q1 growth rate was mainly affected by the epidemic. Hospital-side sales are expected to be blocked in February and March, and growth is expected to resume after the epidemic this year. The high growth rate in recent years stems from four aspects: (1) the core variety Kevi has benefited from influenza factors. The growth rate is expected to be high in connection with influenza testing and increased awareness of drug use; (2) the company continues to strengthen retail pharmacy channel promotion. It is estimated that the pharmacy channel currently accounts for more than 15% of Kewei's total sales; (3) In addition, it is expected that the number of hospitals covered by Kewei (capsules+pellets) at the grassroots level has increased dramatically, and the share of grassroots revenue is expected to reach about 20%; (4) the company's sales staff have been greatly strengthened and academic promotion has now been exceeded. 3000 people, which is expected to continue to increase.
Generic drugs will benefit from volume procurement policies in the future, and innovative drugs are gradually declared for production and entering the harvest period: the company has purchased more than 30 generic drugs from the Group Research Institute. The varieties in this batch have all passed ANDA from overseas. It is expected that after the CDE is approved, they will be treated as having passed the consistency evaluation, and are expected to benefit from the volume procurement policy. Of these, 7 have already entered the collection catalogue, and there are about 10 potential varieties that have entered the collection catalogue. We expect the company to be approved for more than 10 generic drugs in 2020.
In addition, SGLT-2 is in phase III clinical trials. The innovative drug, the anti-hepatitis C emitavir, has been declared for production. It is expected that it will be approved for marketing next year, and production of the third generation of glycine insulin is expected to be put into production soon.
The research pipeline is progressing smoothly, and the research institute's new drug fleet has been perfected: the company has extensive research pipelines, clinical progress on hepatitis C drugs and insulin varieties is progressing smoothly, and the genotype triplex anti-hepatitis C DAA drug, candarevir, has entered clinical phase I. The group is developing a wide variety of products. Among them, the new anti-hepatitis B drug mofacetine with a novel mechanism and target is expected to cure hepatitis B. It is currently in phase II clinical trials; the antitumor drug ningotinib is expected to enter phase II in China, and lelotinib is expected to enter phase III clinical trials, which are progressing smoothly.
Valuation and Profit Forecasting
Considering the fluctuations in performance caused by the impact of the short-term pandemic, it is likely that the future of Cowell will be negatively affected by volume procurement and financial expenses for convertible bonds. We gave the EPS of 5.30/6.04/5.58 yuan respectively for the 2020-2022 EPS, and the corresponding PE was 5.8/5.1/5.5 times.
Risk warning
Weber is affected by the influenza cycle, and future performance (receivables, etc.) is uncertain. There is intense competition among many types being developed in the field of hepatitis C, and sales are uncertain. The impact of convertible bonds on financial costs is uncertain.
