Jingxin Pharmaceutical Co., Ltd. has rich product pipelines and sound financial situation. The company has constructed a complete pharmaceutical industry chain from raw materials to finished drugs, focusing on chemical drugs and supplemented by traditional Chinese medicine, realizing the integrated development of raw materials and preparations, and developing medical devices in a timely manner. Jingxin Pharmaceutical Co., Ltd. has seen steady growth in operating income and net profit. 2023H1's revenue was 1.937 billion, up 3% from a year earlier, and its net profit was 316 million, up 6% from a year earlier, slightly affected by the company's sales adjustment. The decline of the company's gross profit margin and sales expense rate has slowed. 2018-2023H1, affected by collection, the company's product sales gross profit margin and net profit margin have declined, 2023H1 is 50.51% and 16.31% respectively, the decline gradually slows down. In terms of the period expense rate, the sales expense rate has declined year by year since 2018, with 2023H1 as low as 20.57%. The pharmaceutical manufacturing sector contributes to the core gross profit, while the finished drug business contributes to the core revenue. In 2022, the company's total revenue was 3.78 billion yuan, of which the finished drug revenue of the company's largest business plate was 2.216 billion yuan, an increase of 9% over the same period last year, accounting for nearly 60%, and increasing year by year.
Beijing new pharmaceutical industry imitation pharmaceutical product line, supply risk clearing is expected to bring future increment. According to the company's annual report, the three main pipelines of generic drugs in the finished drug business are: central nervous system drugs, cardiovascular drugs and digestive system drugs. The income in 2022 is 5.70 minutes 5.86 and 432 million respectively, and the proportion of tripods remains stable. The main varieties of the company have been included in the collection, the stock risk is basically cleared, and the barefoot varieties bring increment. The main varieties of the company have been included in the national collection or large-scale inter-provincial alliance collection, in which rosuvastatin, pivastatin and other stock varieties have declined significantly, while barefoot varieties such as levetiracetam, Praxol and other barefoot varieties have been released quickly with the help of collection. At present, only Bacillus licheniformis and carbaradine have not been collected, and the performance fluctuation caused by collection tends to be mild. With the increase of market share and the completion of sales adjustment, the main varieties are expected to return to the rising channel.
The layout of innovative drug research and development is perfect, and the performance growth is sustainable. The company's clinical value-oriented, differentiated design and innovative drug research and development, around the field of mental nerve (CNS) and cardio-cerebrovascular (CV) field, continue to build a product-leading new drug pipeline. The company's R & D expenditure in 2022 was 367 million yuan, an increase of 10% over the same period last year, mainly due to increased investment in innovative drugs. The company's first class new drug Didazini has unique clinical advantages and is ahead of the progress of research and development. Didazenil capsule (EVT201), as a key product in the company's mental neurological field, is a partial agonist of GABA α receptor, which can induce rapid sleep and significantly improve sleep quality, and significantly reduce the number and time of waking up after falling asleep. It can also avoid the neurological side effects caused by deep inhibition caused by over-activation of GABA α receptor, has fewer adverse reactions compared with traditional sleeping drugs, and improves the mental state of patients during the day. As of August 2023, Didazenil has been under technical review and is expected to become the first innovative drug for insomnia listed in China in recent years.
Investment suggestion: we expect that the company will achieve revenue of 40.50 and 45.53 million and net profit of 674 million and 811 million respectively in 2025.
According to the relative valuation of the company's business, we give the company 22.0 times PE (2023), corresponding to the target price of 17.18 yuan. Cover for the first time and give a "recommended" rating.
Risk tips: 1) Drug approval is not as expected: there may be a delay in approval of Dacini, the company's innovative product. 2) the release of new drugs on the market is less than expected: whether each node of the company's innovative product Didacini goes public has a significant impact on the sales volume of the company's products. 3) the influence of national policy: the policy of health insurance negotiation may be adjusted, thus affecting the sales of finished drugs of the company.