The company is an open platform enterprise that links pharmaceutical innovation and commercialization and controls the full life cycle management of products. The company focuses on clinical needs, has excellent commercialization capabilities, and has obtained exclusive licensing rights for innovative drugs in China and other designated authorized countries and regions through equity investment/strategic cooperation/independent determination. The company focuses on precise efforts in the field of specialist diseases, continues to promote the large-scale development of cardiovascular, digestive, dermatology and ophthalmology business sectors, and continuously expands the breadth and depth of business. At the same time, it also expanded related fields to medical aesthetics, ophthalmic equipment and consumables, etc.; and expanded to the Southeast Asian market. Kanglianda Health became a “bridgehead” for global pharmaceutical companies to enter the Southeast Asian market, and various innovative products have obtained rights in the Southeast Asian market. Combining the absolute valuation method and the relative valuation method, we estimated that the company's reasonable equity value was $42,455 billion (equivalent to HK$46.283 billion), corresponding to the target price of HK$19, covering the first time, and giving it a “buy” rating.
Company Overview: A platform-based pharmaceutical company linking pharmaceutical innovation and commercialization. Founded in 1992, Kangzhe Pharmaceutical is an open platform enterprise linking pharmaceutical innovation and commercialization to control the full life cycle management of products.
The company is based on rapid clinical development, registration and commercialization of innovative drugs. Through various methods such as equity investment, strategic cooperation or independent research, the company has obtained exclusive licensing rights for innovative drugs in China and authorized countries or regions, including clinical development, production, registration and sales. The company owns a number of specialist business companies such as “Kangzhe Beauty” and “Kangzhe Weisheng”, etc., and independently operates the dermatology and aesthetic ophthalmology business sector, starting a second growth curve.
At the same time, the company actively explores the Southeast Asian market, accurately empowering global pharmaceutical companies to quickly enter the Southeast Asian market.
Relying on the company's strong product strength, strong commercialization capabilities, and refined management system, performance continued to grow rapidly — the company's revenue for 2008-2022 (if calculated based on drug sales revenue) CAGR was 24.19%, and 2023H1 revenue (if calculated based on drug sales revenue) was 5,537 billion yuan, an increase of 7.1% over the previous year. The company's 2008-2022 net profit CAGR was 27.74%, and 2023H1 net profit was 1,916 billion yuan, up 6.7% year on year.
The company joins hands with global innovation forces, and innovation is rich in research pipelines. The company focuses on clinical needs, relies on the core advantages of commercialization capabilities, and obtains exclusive licensing rights for innovative drugs in China and authorized countries or regions through equity investment/strategic cooperation/independent customized development of innovative products. At the same time, the company focuses on major diseases and chronic diseases in specialized fields and differentiates innovative pipelines. Starting in 2018, the company's product strategy has changed from original mature products to innovative patented products. After five years of investment layout and R&D promotion, the company has laid out 30 differentiated innovative products, mainly FIC and BIC. Among them, diazepam nasal spray, tericizumab injection, and methotrexate injection (psoriasis) were approved for listing in China in 2023, and subsequent innovation results will gradually blossom. At present, the company has become an open platform enterprise linking pharmaceutical innovation and commercialization and controlling the full life cycle management of products. We believe that with its efficient and rapid clinical development capabilities, professional academic promotion team, and deep exploration and layout of innovative products that do not meet clinical needs, the company's performance is expected to maintain steady growth.
Focusing on precise efforts in the field of specialist diseases, the country's post-procurement performance is expected to stand at a high level. The company focuses on the field of specialist diseases and continues to expand the breadth and depth of its business. Cardiovascular and cerebrovascular business, with core products such as bioactive, boidine, and dilexin, has a good competitive pattern. The 2019-2022 revenue CAGR is 18.41%, 2023H1 revenue is 3,096 billion yuan, up 5.9% year on year; digestive pipeline business, the company has core products including Yousiver, Salford, Yishuo, and Kang Bishen, with a revenue CAGR of 18.23% and 2023H1 revenue of 1,780 billion yuan, an increase of 4.20% over the previous year; at the same time, the company has developed deeply into specialized fields such as dermatology and ophthalmology, and Extend related fields to medical aesthetics, ophthalmology equipment and consumables, etc., and continue to expand and deepen cultivation in Xinjiang. In the skin medical and aesthetic business, Kang Zhemei promoted rapid business development through endogenesis and epitaxial expansion. The revenue CAGR in 2019-2022 was 37.49%, and the 2023H1 revenue was 246 million yuan, an increase of 27.40% over the previous year; in the ophthalmology business, Kang Zhe Weisheng is committed to achieving the full layout of ophthalmic devices, with a revenue CAGR of 13.67% and 2023H1 revenue of 246 million yuan, an increase of 29.60% over the previous year. We believe that as the company's core varieties Boyding and Yousif enter the eighth batch of national procurement, the main varieties should be fully harvested. The impact of collection on the company will be gradually eliminated in the future, and the company's future performance is expected to remain stable at a high level.
The layout of the Southeast Asian market accelerated, and the internationalization strategy created a second growth curve. The Southeast Asian market is an emerging economy with potential, and the ecological development of the healthcare industry has shown vigorous vitality. Kanglianda Health has taken advantage of its first-mover advantage to gradually establish a systematic business structure integrating “introduction, development, production, formulation CDMO, and commercialization”, becoming a “bridgehead” for global pharmaceutical companies to enter the Southeast Asian market. Many innovative products have obtained rights in the Southeast Asian market. At the same time, the company strategically cooperates with biotechnology companies or pharmaceutical companies in Europe, America, Japan and China to develop products, accelerate the commercialization process of products, and open up a new second growth curve for the company.
Risk factors: risk of price reduction of the company's products; risk of product development progress falling short of expectations; risk of product release falling short of expectations; risk of product launch progress falling short of expectations; risk of technology upgrade and product iteration; intellectual property risk.
Profit forecasting, valuation and rating: The company is an open platform enterprise linking pharmaceutical innovation and commercialization to control the full life cycle management of products. The company focuses on clinical needs, has excellent commercialization capabilities, and has obtained exclusive licensing rights for innovative drugs in China and other authorized countries and regions through equity investment/strategic cooperation/independent determination. The company focuses on precise efforts in the field of specialist diseases, continues to promote the large-scale development of cardiovascular, digestive, dermatology and ophthalmology business sectors, and continuously expands the breadth and depth of business. At the same time, it also expanded related fields to medical aesthetics, ophthalmic equipment and consumables, etc.; and expanded to the Southeast Asian market. Kanglianda Health became a “bridgehead” for global pharmaceutical companies to enter the Southeast Asian market, and various innovative products have obtained rights in the Southeast Asian market. Overall, we estimate that the company's revenue for 2023-2025 will be 94.54/102.57/11,827 billion yuan, and EPS will be 1.34/1.40/1.54 yuan. Combining the absolute valuation method and the relative valuation method, we estimated that the company's reasonable equity value was $42,455 billion (equivalent to HK$46.283 billion), corresponding to the target price of HK$19, covering the first time, and giving it a “buy” rating.