2020Q3 realized revenue of 883 million yuan, down 12.56% from the same period last year, net profit of 127 million yuan, + 2.13% year-on-year, deducting non-return net profit of 101 million yuan, down 35.02% from January to September 2020, + 12.85%, deducting non-return net profit of 606 million, + 173%. The decline in Q3 net profit is mainly affected by internal exchange gains and losses and temporary contraction in demand for heparin raw materials; enoxaparin sodium preparations have a clear upward trend in European volume and price, and China is the first to pass the consistency evaluation; CDMO business is sound; innovative drugs are waiting to bloom; continue to focus on recommendations and maintain the "buy" rating.
Due to the contraction in demand for APIs and exchange gains and losses, Q3 was slightly lower than expected. The revenue of Q3 in 2020 was 883 million yuan, down 12.56% from the same period last year, and the net profit was 127 million yuan, + 2.13% compared with the same period last year, deducting 101 million yuan from non-return net profit, down 35.02% from January to September 2020. + 12.85%, deducting 606 million of non-return net profit, + 173% year-on-year. The decline in Q3 net profit was mainly affected by internal exchange gains and losses and a brief contraction in demand for heparin APIs, and the overall performance was slightly lower than expected.
The upward trend of volume and price in Europe is obvious, and it is the first to pass the consistency evaluation in China. The overall sales of enoxaparin sodium preparation reached 930 million from January to September 2020, + 28.7% compared with the same period last year; the end-price of preparation in Europe showed the effect of simultaneous increase, and the company has made rapid adjustments according to the second wave of epidemic outbreak; the United States obtained FDA approval on September 21 and is expected to start sales in the United States in the fourth quarter; preparations of all five specifications sold in China have also taken the lead in passing the consistency evaluation, which has played a strong role in promoting sales in China. The preparation side presents a global flowering trend, which will be the main business driving growth in the future. In addition, on August 26, the US government updated the invitation for bid for the procurement of the National Strategic Reserve, including the procurement demand for heparin and enoxaparin; Hypri, relying on its overseas subsidiary SPL, long-term layout of US heparin API production, is expected to win the bid in this bid, which will be good for the API market for a long time.
Biological agents CDMO business growth, Saiwan Biological on-hand orders are sufficient. Benefiting from the substantial increase in CDMO biopharmaceutical industry and gene therapy carrier demand, Saiwan biological orders continued to grow, income and gross profit increased rapidly; and basically unaffected by COVID-19 epidemic, CDMO business developed smoothly. 2020Q3 achieved revenue of 193 million in a single quarter, with a gross profit margin of 26.5% from January to September compared with the same period last year and + 1.7pcts. At present, the number of hand orders in Saiwan has increased by 50% compared with the beginning of the year, and has a number of commercial and III clinical varieties; it is expected to achieve 900 million revenue and a gross profit margin of more than 30% in 2020; and sales growth of 20% is expected in the next few years.
Innovative drugs are accelerated and blockbuster products can be expected in the future. The progress of the company's research and development of innovative drugs during the reporting period is mainly as follows:
① Oregovomab: the global multicenter III phase clinical trial has been officially launched; SPAC is planned to be listed in Korea, and most of the regulatory approvals have been received and delivery is expected to be completed in the fourth quarter of this year; ② AR-301: global multicenter clinical phase III patients continue to be enrolled in the group. We continue to be bullish on RVX-208, Oregovomab and AR-301, and are expected to become blockbuster products in the future.
Risk factors: the price of enoxaparin sodium preparation is lower than expected, the demand for heparin raw materials is reduced, and the risk of failure in innovative drug research and development.
Investment suggestion: the company is the leading enterprise of heparin raw material drugs and preparations in China, and has been actively distributed in the field of CDMO and innovative drugs in recent years. Taking into account the internal exchange gain and loss in the third quarter and the temporary contraction in demand for heparin raw materials, we downgrade the company's 2020-2022 net profit forecast of 9.26,11.73 and 1.577 billion yuan respectively (the original forecast is 10.73,13.03 and 1.738 billion yuan), and the corresponding EPS is 0.63,0.80,1.08 yuan respectively (the original forecast is 0.7380,1.18 yuan). Corresponding to the current stock price, the corresponding PE is 35,28,21 times respectively. Continue to focus on recommendations and maintain a "buy" rating.
