occurrences
Recently, the company announced its 2020 semi-annual report. During the reporting period, the company achieved revenue of 192 million yuan, a year-on-year decrease of 39.68%; achieved net profit of -3.78 million, a year-on-year decrease of 106.77%; net profit after deducting non-return to the mother was 15.51 million, a decrease of 139% over the previous year; and achieved net cash flow from operating activities of -8.49 million.
Investment highlights:
Many factors such as the epidemic and policies have affected Jinlujie's business. The overall CRO business remained steady. In the first half of this year, the company's revenue from Jinlujie products was 66 million, down 72% from the same period last year. The overall market for rat nerve products has shrunk in recent years due to industry policies and medical insurance control fees. Since the company's rat nerve production base is located in the Wuhan headquarters, combined with the impact of COVID-19 emergencies in the first half of this year, sales are expected to pick up in the second half of the year. The overall revenue of Tianjin Hankang's CRO business in the first half of the year was 74 million yuan, an increase of 4.4% over the previous year, and its share in the company's overall business continued to increase. In the future, with the launch of the Jingmen API base and the gradual extension of the business chain to downstream CDMO, Hankang will provide downstream customers with integrated R&D and production services from pre-clinical to commercialized. At the same time, starting this year, Hankang's CRO business will gradually become the company's overall dominant business, fully benefiting from the high level of prosperity in the industry and Hankang's competitive advantage in the overall market. The company will gradually escape the decline in performance and gradually resume steady growth.
The CPT project progressed smoothly. The fixed increase helped subsequent commercialization and development of other indications. In February of this year, the company officially announced the CPT project unraveled, and officially announced the main results of the phase III clinical trial statistical analysis in June. The main efficacy endpoint indicator was progression-free survival (PFS), and the key secondary endpoint indicators OS, overall response rate (ORR), and disease progression time (TTP). The test group all showed significant benefits. Following the CPT application for listing, it will bring new treatment options to RR MM patients who have been treated at least twice in China. Currently, the CPT data collection and registration process is progressing smoothly. At the same time, the company recently announced a fixed increase plan: it plans to raise no more than 975 million yuan, mainly for API base construction, CPT industrialization projects, and development of other indications. The company's CPT project is expected to begin with the approval of MM indications for listing. Subsequent expansion of other indications, CPT will gradually develop into a major pharmaceutical product in the market. At the same time, we also believe that as traditional Jinlujie products enter the end of the product life cycle, the company's future development focus has shifted to the CRO&CDMO business and the innovative drug business centered on CPT. In the future, with the gradual implementation of fixed increase projects, the company will usher in a new round of rapid development.
Profit forecasts and investment suggestions:
Due to the impact of factors such as the COVID-19 pandemic and health insurance policies, our performance forecasts for this year and the future have been lowered:
The company is expected to achieve revenue of 372 million, 573 million, and 789 million yuan respectively in 2020, 2021, and 2022; it is expected to achieve net profit of 41 million, 82 million, and 105 million respectively; corresponding to the current stock price PE is 139 times, 70 times, and 55 times, respectively; due to the gradual elimination of the negative impact of the epidemic, the company's overall business situation will improve markedly from the second half of the year. At the same time, as the CRO&CDMO business and CPT projects continue to be implemented, the company will continue to make recommendations and maintain the “increase in holdings” rating.
Risk factors: The risk that CRO and CDMO business expansion falls short of expectations, the progress of follow-up reviews of innovative drug projects, and the risk that commercialization performance falls short of expectations.
