Abstract

Guilin Sanjin is one of the earliest manufacturers of modern traditional Chinese medicine preparations in China, among which Guilin watermelon cream, watermelon frost moistening throat tablets and Sanjin tablets are famous brands of traditional Chinese medicine. In 2017, Guilin Sanjin established the development strategy of "taking traditional Chinese medicine as the core, biotechnology industry and large health industry as the two wings, and related industries as the supplement", and the performance of the biopharmaceutical sector is expected to be realized steadily.

The first-line varieties have significant advantages, and the second-line varieties are expected to continue to grow.

Guilin Sanjin has 47 kinds of unique varieties developed independently, such as Guilin watermelon cream, watermelon frost moistening throat tablets, Sanjin tablets, Naomaitai capsules and so on. After years of efforts, Sanjin has formed a strong professional and market advantage in throat, oral and urinary system medication, and the representative products Sanjin watermelon cream series and Sanjin tablets have been in the forefront of similar proprietary Chinese medicines in the country for many years. In terms of second-line varieties, the sales of the company's second-line variety vertigo tablets in single dosage form exceeded 100 million in 2022. At present, the company is actively carrying out the market promotion pilot of second-line exclusive products, exploring the academic promotion model of medical terminals, and speeding up the construction of e-commerce terminals. in order to achieve rapid growth in sales. 2023Q1 continued to increase sales efforts to achieve operating income of 716 million yuan (yoy+38.51%) and return to its mother net profit of 169 million yuan (yoy+40.96%).

Biopharmaceuticals are competitive, and there are many potential varieties in the pipeline.

Shanghai Sanjin (and its treasure ship biology and white sail biology) is in charge of the company's biopharmaceutical business, in which Baifan biology is positioned as the company's biopharmaceutical production base with rich production capacity to provide CDMO business. By the end of 2022, Baochuan Bio has 9 products under development, including the new TNFR2 non-blocking therapeutic antibody BC011 selected for the 2022 AACR annual meeting and CD47/CLDN 18.2 double anti-BC007 with the first clinical progress in China and the second in the United States.

Continue to increase the size of CDMO business, it is expected to break even

By the end of 2022, Baifan Bio has signed strategic cooperation agreements with Bai Osseto, Waber Eke Shu Bio and Maiji Bio respectively, and jointly funded the establishment of extraordinary Bio with the help of the advantages of both sides and the local resources and policy support of Chongqing, the plan focuses on the layout of all-round CDMO services in the clinical and commercial phase. As the company's CDMO orders continue to grow, the company expects to break even and gradually make a profit by 2023.

We estimate that the company's total revenue for 2023-2025 will be 23.68 million yuan respectively, with an increase of 20.81% 18.89% and 17.92% respectively over the same period last year. The net profit belonging to shareholders of the listed company will be 4.62 million yuan and the EPS will be 0.79 percent and 0.96 billion respectively. Considering the accelerated growth of new dosage forms of the company's core varieties, the continuous volume of second-line varieties, and the breakeven of CDMO business this year, we are optimistic about the development of the company, giving it 22 times PE in 2024, with a target price of 21.04 yuan per share. Cover for the first time, giving a "buy" rating.

Risk hints: industry policy change risk, company product price decline risk, market competition intensification risk, raw and auxiliary material price fluctuation risk