The company is a leading enterprise of PPI injection in China. In 2018, Ausaikang was listed backdoor as a leading enterprise of domestic proton pump inhibitor (PPIs) injection. PPIs product line covers five of the six PPIs listed in China, with the core focusing on the four major treatment areas of digestive tract ulcer, tumor, drug-resistant bacterial infection and diabetes. The chairman of the company has a deep background in the pharmaceutical industry and founded Nanjing Haiguang Institute of Applied Chemistry, the earliest private new drug research and development institution in Jiangsu Province, leading the R & D and listing of China's first domestic PPI injection. The company was listed backdoor at the end of 2018 and achieved revenue of 4.519 billion yuan in 2019, an increase of 14.92% over the same period last year. The net profit of returning to the mother was 781 million yuan, up 16.55% over the same period last year. The net profit after deducting non-return was 761 million yuan, up 18.78% over the same period last year.

The existing business PPI injection is the core, and the company focuses on the four major treatment areas of digestive tract ulcer, tumor, drug-resistant bacterial infection and diabetes. Among them, PPI injection is the core, and the product line covers five of the six PPIs listed in China, most of which are the first or the first batch to be listed. The company is in the forefront in the consistency evaluation of injections, not only in the first place in China, but also in the leading position in the progress of various varieties. All the five PPI injections listed on the market have submitted applications for consistency evaluation, of which 3 are the first in China and 2 are the second in China. The market share of some varieties is not high. In the future, it is expected to take the lead in over-evaluation and bring significant growth in performance through collective collection. In the field of oncology, the company Nedaplatin is the first to apply for consistency evaluation, and right Rizuosheng is the only domestic variety to maintain steady growth. In the field of diabetes, Aoxinyi is the first imitation of Saglitine, and it is also the first imitation of DPP-4 inhibitors in China.

The third generation of tumor drug EGFR inhibitors wait for flowers to bloom, and it is expected to build a new drug product echelon company to regard innovation as the source of development, with profound R & D background and outstanding innovation ability after years of development. The company's R & D is located in urgent clinical needs, the first imitation in China, and the combination of creation and imitation. At present, the pipeline is rich in products, and nearly 40 varieties have entered the stage of listing application or clinical trial. In the field of oncology, the third-generation EGFR inhibitor class 1 innovative drug targeting T790M is expected to complete the second phase of clinical trials around the end of this year. We estimate that the potential sales peak of this variety is expected to reach 2.2 billion yuan. In the field of digestion, the company has laid out a new generation of chiral drugs such as right rabeprazole and levopantoprazole, which will effectively complement existing PPI injections in the future. In the field of drug-resistant bacterial infection treatment, the company has arranged antibacterials such as posaconazole and polymyxin E, both of which have been included in the priority review stage, and posaconazole injection is expected to be listed for the first time in China this year. In addition to independent research and development, the company also actively seeks the introduction of varieties. We believe that with its R & D strength, the company is expected to successfully build an echelon of innovative drug products in the future.

Innovation + high-end first imitation multi-point blossom, optimistic about the company's long-term development to the "buy" rating company as a domestic PPI injection leader, the existing business growth is steady, PPI injection forms a "product echelon + consistency declaration leading + differentiated chiral PPI", which is expected to occupy an advantage in injection collection in the future. In the R & D pipeline, a number of important "innovative drugs + high-end first imitation" series of varieties differential layout, is expected to rely on "independent research and development + variety introduction" and other ways of successful transformation. The focus of the company this year is that the third generation of EGFR inhibitors are expected to complete the second phase of clinical conditional production around the end of the year, and a number of high-end blockbuster generic drugs are expected to be the first to be approved to market as an important catalyst. In the long run, the company's follow-up innovative varieties and positive layout is expected to form an echelon of innovative drug products in the future. We think the company is a high-quality company with both long-term logic and short-term catalysis. Considering only the existing products, we estimate that the return net profit of the company from 2020 to 2022 is 880 million yuan (yoy+12.68%), 1.043 billion yuan (yoy+18.47%) and 1.203 billion yuan (yoy+15.39%), respectively, and the corresponding PE is 20, 17 and 14 times, respectively. Through the segment valuation, we conservatively estimate the company's reasonable target market value of 23.7 billion yuan in 2020, corresponding to the target price of 25.59 yuan, giving a "buy" rating.

Risk hints: new drug research and development risk; drug review progress is slower than expected; product sales are lower than expected; injection collection price reduction risk