Main points of investment
2023H1's revenue is growing rapidly and its profit performance is better than expected. The company issued an interim results announcement in 2023: 2023H1 achieved revenue of 6.907 billion yuan (+ 33.3%), mainly due to the rapid growth of income of the three major divisions; net profit of 1.285 billion yuan (+ 104.0%), mainly due to the substantial increase in the profitability of intermediates and APIs and the continuous improvement of the company's operating efficiency. From a sub-business point of view, the segment income of intermediates, APIs and preparation products (including inter-segment sales) is 2.692 billion yuan (+ 37.2%), 3.849 billion yuan (+ 34.6%) and 2.436 billion yuan (+ 29.1%) respectively; segment profits are 814 million yuan (+ 89.8%), 428 million yuan (+ 133.4%) and 304 million yuan (- 1.2%) respectively.
In terms of expenses, the expenses of sales, management and R & D are 975 million yuan (+ 21.0%), 381 million yuan (+ 10.4%) and 339 million yuan (+ 39.6%) respectively, and the three major expense rates are 14.1% (- 1.4pp), 5.5% (- 1.1pp) and 4.9% (+ 0.2pp), respectively.
The demand for intermediates has warmed up, and APIs continue to grow rapidly. The external sales income of 2023H1 intermediates and APIs is 1.047 billion yuan (+ 41.4%) and 3.423 billion yuan (+ 34.1%). The rebound in demand represented by overseas markets led to a steady rise in the market prices of related products. 2023H1 earned 1.362 billion yuan (+ 29.4%) from overseas export sales.
The effect of insulin collection needs to be cleared, and animal protection products maintain a high growth trend. (1) Insulin products: the impact of the special collection of insulin implemented in May 2022 is still there. The sales income of 2023H1 insulin analogues was 267 million yuan (- 1.8%), and that of human insulin was 231 million yuan (- 33.6%). (2) antibiotic products (including animal protection): 2023H1 antibiotic products (including animal protection) achieved sales income of 1.725 billion yuan (+ 50.5%). Among them, tazoxian achieved sales income of 387 million yuan (+ 22.7%). At present, tazoxian has been selected in the eighth batch of collection, and it is expected to sell quickly in the future. Amoxian achieved sales income of 247 million yuan (+ 17.7%). Benefiting from the steady progress of the strategic cooperation between the wholly-owned subsidiary Inner Mongolia Federal Animal Insurance Pharmaceutical and Pastoral Food, the sales income of animal protection products has reached 534 million yuan (+ 158.6%).
Diabetes drugs are about to be cashed in the research pipeline. The company focuses on endocrine and autoimmunity and other areas, in the research of human drug new products reached 34, of which 16 are first-class new drugs. The layout of diabetes drug research and development pipeline is perfect, covering Lilaru peptide, Degu insulin, Simiguelu peptide, Degumentong double insulin and other products, which is expected to be put on the market from 2024 to 2027. Among them, NDA (indication for diabetes) has been accepted and is expected to be approved in 2024; Smeagrup (indication for weight management) has been approved clinically, and the domestic research progress in the field of weight reduction of similar bioanalogues of Smeagru peptide is ahead of others. The self-developed new drug UBT251 is the first in China and the second in the world to prepare GLP-1/GIP/GCG triagonists by chemical synthetic peptides. Its type 2 diabetes and weight loss indications have been approved clinically, and the clinical application for non-alcoholic fatty liver / non-alcoholic steatohepatitis is in the final review stage.
Investment advice: the company's strong demand for intermediate APIs; the impact of insulin collection will gradually weaken, the rapid growth of animal protection products; preparations in the research pipeline will be cashed one after another. We predict that the company will achieve a net profit of 22.61 million yuan in 2023-2025, with a growth rate of 43%, 5.6% and 5.2%. The corresponding PE is 5.3 Compact 5.0 Compact 4.8 times.
For the first time, give "Buy-A" advice.
Risk hints: industry policy change risk, exchange rate fluctuation risk, trade environment change risk, new drug research and development risk, market uncertainty risk of products under research, API price fluctuation risk and so on.