Aurit has built a leading platform for the development and production of small molecule, peptide and oligonucleotide drugs, gradually extending from APIs / intermediates to formulations, establishing a product chain covering six areas: respiratory system, cardiovascular system, anti-infective system, nervous system, anti-tumor and women's health. Thanks to the excellent selection ability, the company's profitability is outstanding, which also proves the competitiveness of the company's core technology platform. At the same time, the company has laid out the field of oligonucleotides + peptides ahead of time, and the capacity building is complete. We believe that the company's core products have a leading global market share and have formed a diversified product echelon with high barriers, good competition and strong growth, and are expected to continue to benefit from the increase in API demand brought about by generic drug release after the expiration of the original research patent. At the same time, new businesses such as preparations, peptides and small nucleic acids have also opened the company's second and third growth curve, with strong certainty of future performance growth.
To sum up, we give the company a target price of 29 yuan in 2024. Cover for the first time, giving a "buy" rating.
The leading small molecule + peptide + small nucleic acid drug platform issues convertible bonds to expand production capacity. The company has established a product chain covering six areas: cardiovascular, female health, respiratory system, anti-tumor, nervous system and anti-infection. core products include eplenone, dextroprogesterone, fluticasone propionate, abirone acetate, pregabalin, tenofovir and other APIs and intermediates. The company's three existing production bases have passed the FDA audit, high-quality products are sold overseas (overseas revenue accounts for 91.3% in 2022), and are deeply bound to a number of major MNC customers. The customer base is high-quality and stable. On June 29, 2023, the company issued a prospectus for issuing convertible corporate bonds to unspecified targets: according to the prospectus, the three major investment projects are expected to contribute more than 1.5 billion yuan in sales revenue.
Excellent product selection, process development and technical ability, outstanding profitability. We believe that the company's current core varieties are of high quality and the level of gross profit margin has been in the first echelon in the industry for a long time. According to the company's prospectus and convertible bond prospectus, the gross profit margin of the company's core varieties has been relatively stable in the past six years, and the gross profit margin of some varieties is relatively high-- 23H1 dextroprogesterone is 84.1%, fluticasone propionate is 83.5%, and eplenone is 67.5%. The continuous release of high gross margin varieties also makes the overall gross profit margin of Aurit significantly higher than the industry average. We believe that the high gross margin comes from the company's excellent product selection ability, but also proves the company's excellent process development ability and the barrier of the technology platform-to obtain a higher gross profit margin by choosing a more difficult and competitive variety.
Diversified products echelon, API preparation integration opens the second growth curve. Through years of R & D and innovation and technological accumulation of industrial production, and relying on its six major technological platforms, Aurite continues to develop high-barrier API business and actively distribute peptides and oligonucleotide drugs. at present, it has formed a diversified product echelon with high barriers, good competition pattern and strong growth. Core products have contributed sustained and stable revenue to the company, and some products lead the world in market share: according to the company's convertible bond prospectus, the company's global market share of ipridone is 36.69% in 2022, and that of Abitron is 22.89%. The global market share of fluticasone propionate is 10.10% (Note: the global market share is the company's sales / global consumption of similar APIs). The company's follow-up API (Active Pharmaceutical Ingredient, API) product reserve is rich, and it has cut into the preparation field through the Ditroprogesterone product with the advantage of API (Di Chu progesterone tablet is the first imitation in China), opening the second curve of performance growth.
The field of oligonucleotides + peptides will be laid out in advance, and the capacity building is complete, which is expected to further open up the room for growth. In 2021, the company founded Aurite Biology, which can provide one-stop CRO/CDMO services for oligonucleotide drugs from laboratory research and development, process development, clinical stage to commercial (kg level) production. At the same time, the company is also developing a number of oligonucleotide API products, including Nosinarone sodium, Inrisuran and so on. In the aspect of polypeptide drugs, by the end of Q2 in 2023, the fund-raising and investment project of Yangzhou Aurite with an annual output of 300 kg of simiguelutide APIs has completed the construction of the fermentation workshop, and the synthesis workshop is still under construction. According to the company's semi-annual report and performance exchange meeting, the company expects that the production workshop of Simigrup API will be completed in March 2024, the regulatory market registration will be completed by the end of 2024, and revenue will be gradually generated in 2025. We believe that the company's production capacity of semi-fermentation is located in the first echelon in China, and has a significant cost advantage, which is expected to benefit from the huge demand increase brought about by the listing of Smeglu peptide imitation pharmaceuticals.
Risk factors: industrial policy change and drug price reduction risk; drug quality control risk; R & D progress not as expected risk; international trade friction risk; fund-raising project progress is not as expected risk.
Earnings forecasting, valuation and rating: Aurit has built a leading platform for the development and production of small molecule, peptide and oligonucleotide drugs, gradually extending from APIs / intermediates to formulations, establishing a product chain covering six areas: respiratory, cardiovascular, anti-infective, nervous system, anti-tumor and women's health. Thanks to the excellent selection ability, the company's profitability is outstanding, which also proves the competitiveness of the company's core technology platform.
At the same time, the company has laid out the field of oligonucleotides + peptides ahead of time, and the capacity building is complete. We believe that the company's core products have a leading global market share and have formed a diversified product echelon with high barriers, good competition and strong growth, and are expected to continue to benefit from the increase in API demand brought about by generic drug release after the expiration of the original research patent.
At the same time, new businesses such as preparations, peptides and small nucleic acids have also opened the company's second and third growth curve, with strong certainty of future performance growth. We predict that the company's revenue from 2023 to 2025 will be 1.264 billion / 1.551 billion / 1.966 billion yuan, an increase of 25.3%, 22.8%, 26.7%, and net profit 225 million / 301 million / 405 million yuan, an increase of 6.7%, 33.7%, 34.5% over the same period last year. To sum up, with reference to the comparable company's 34 times PE valuation in 2024, taking into account the impact of the company's incentive costs and a number of potential reserves in the pipeline, we give the company a target price of 29 yuan in 2024, corresponding to the 2023 PE 2024 PE 2025 respectively. Cover for the first time, giving a "buy" rating.