Main points of investment:
The company is mainly engaged in the research and development, production and sales of chemical API and its preparation products. The company was founded in 2004, since its inception has been focused on chemical API research and development and manufacturing, and based on characteristic API, expand part of the chemical preparation business. The company's products cover hypoglycemic, anesthetic, cardiovascular and mental diseases and other key areas. API products include gliclazide, metformin hydrochloride, ropivacaine hydrochloride, isosorbide mononitrate and so on. Chemical products mainly include fluoxetine hydrochloride dispersible tablets, isosorbide mononitrate sustained release tablets and isosorbide mononitrate tablets. The company's intermediates are chemical intermediates customized according to customer needs, mainly OR10127 and OR10154.
Multiple factors promote the development of API industry. (1) according to Evaluate Pharma, patented drugs with sales of nearly $160 billion will expire between 2020 and 2024. Based on the fact that the price of generic drugs is about 10% of patented drugs, the alternative space for generic drugs in the past five years is about US $160-32 billion. The expiration of a large number of patented drugs will stimulate the continuous growth of the generic drug market and promote the expansion of the market scale of raw materials. (2) under the current policy background, production costs, drug quality, environmental protection requirements and other factors have raised the barriers of the API industry, the speed of market clearance is accelerated, and the industry concentration is expected to be further improved. (3) depending on the advantages of cost and quality, API enterprises will be easier to extend to downstream preparations and grasp the market initiative. The integration of APIs and preparations has become the mainstream trend of the industry development.
The company has the advantages of manufacturing and product scale. After nearly 20 years of production experience and technological innovation in chemical synthesis, the company has strong production capacity of chemical raw materials, complete synthesis equipment, mature synthesis process, strong industrialization ability and standardized quality control. continue to improve the reaction yield or product purity, improve production efficiency, reduce three waste emissions, the stability and safety of the production process can also be consolidated. Gradually accumulate and form the core technology used in the production of chemical API. The company is a leading enterprise in the domestic production of gliclazide and ropivacaine hydrochloride, and also has a certain market influence in the field of metformin hydrochloride and isosorbide mononitrate. The company will continue to strengthen R & D investment, introduce automatic production lines, and strengthen the continuous optimization and development of the existing leading product production processes, so as to improve production efficiency and reduce production costs, which will further strengthen the advantage of economies of scale.
Investment suggestion: the company's earnings per share in 2023 and 2024 are expected to be 0.99 yuan and 1.17 yuan respectively, and the corresponding valuation is 28 times and 23 times respectively. The company is a leading enterprise in the domestic production of gliclazide and ropivacaine hydrochloride, actively developing the integrated development strategy of "API + preparation", which adds new driving force and bright spot for the growth of future performance. Coverage for the first time, giving the company an "overweight" rating.
Risk hint. The rise in the price of raw materials upstream leads to the risk of decline in price and gross profit margin, the risk that downstream preparations are incorporated into the national drug collection and the risk of price decline of API products and the concentration of major products, etc.