New demand helped the narcotics market expand, and new products drove the company's performance growth. Enhua Pharmaceutical focused on the deployment of central nervous system drugs such as anesthetics, psychotropic drugs, and neurological drugs. Benefiting from the recovery of surgical volume combined with the continuous expansion of anesthetic application scenarios, the company's products, Rikyuexi, Forli, and “Hydroxyrishua”, continue to be released. The company continues to enrich its narcotic pipeline products to enhance scientific research capabilities. The innovative analgesic drug TRV130 was launched in May 2023 and is expected to contribute to new revenue growth with significant curative effects; the generic drug zoxin has a large market space and a good competitive pattern, and the market share of the product is expected to increase after the product is launched. Based on stable output of stock varieties and incremental products to be released, we are optimistic about the company's development. We forecast net profit from 2023-2025 to be 11.08/13.66/1,695 billion yuan, corresponding EPS is 1.10/1.36/1.68 yuan, and the current stock price corresponding to PE is 23.1/18.7/15.1 times, respectively, covering the first time, giving it a “buy” rating.
New clinical scenarios are constantly increasing, and the narcotics industry is expected to continue to expand. Narcotic drugs are protected by policy due to their special characteristics, and China has strict restrictions on manufacturers of various narcotics and psychotropic drugs, so the competitive pattern in the narcotics market is relatively stable. The number of inpatient surgeries in China gradually increased from 2015-2021 to 757.38 million in 2021, and the operating revenue of public hospitals in China reached 13.930 million yuan. As the impact of the epidemic is basically eliminated, we believe that the previous backlog of surgical demand is expected to recover further, thus directly driving an increase in demand for narcotics. Furthermore, application scenarios such as medical aesthetics, gastroenteroscopy, painless delivery, and analgesia for cancer pain continue to expand, and the size of the anesthesia market is expected to increase further.
Narcotic drugs are growing steadily, and the incremental varieties “Hydroxyreshua” and TRV130 are expected to continue to increase the company's core variety, Liyuexi, and its exclusive product, Forli, contribute to stable revenue. According to data from the PDB Sample Institute, the market share of Rikyue West in 2022 was 89.74%. Judging from incremental varieties, the market share of the analgesic control product “Hydroxyreshua” is expected to increase dramatically as the company increases its promotion for admission to admission; the company's innovative analgesic drug TRV130 has excellent analgesic effects and low side effects, and has a first-mover advantage among similar products. We believe that the company's new varieties will need to continue to be released in the future. In addition, the company's revenue from traditional collection varieties has declined year by year, and the impact of collection has been implemented.
Risk warning: risk of collection price reduction; risk of drug development failure; risk of increased competition for core products.