Key points of investment:
The company's business is growing steadily. The company is a pharmaceutical and medical display manufacturer with a complete product layout, and a complete pharmaceutical and pharmaceutical industry chain. The company's revenue grew steadily. From 2020 to 2022, the company's revenue increased by -10.66%, 2.39%, and 13.31% respectively; in the first three quarters of 2023, the company's revenue was 2,926 billion yuan, up 4.48% year on year. Among them, finished pharmaceutical companies that experienced sales fluctuations due to collection rebounded steadily. Judging from the profit margin situation, from 2020 to 2022, the company's deducted non-net interest rate was 13.70%, 15.45%, and 15.95%, and 14.93% in the first three quarters of 2023. Judging from the annual data, the deducted non-net interest rate maintained a steady growth trend. Currently, the company has more than 10 innovative drug projects under development and more than 50 generic drug projects, and is continuously advancing the “simulation integration” process.
Major varieties in the three major fields were included in the collection, related risks were basically cleared, and out-of-hospital sales drove generic drugs to return to growth.
The company's chemicals focus on the three major fields of central nervous system, cardiovascular, and digestion. The main varieties of levetiracetam, sertraline, pivastatin, rosuvastatin, simvastatin, and new rehabilitation solutions have all been included in the collection, and the risks associated with the collection have basically been clarified. The company has seen results in expanding the out-of-hospital terminal market, expanding the out-of-hospital market through pharmaceutical e-commerce, brands, and commercial sales. With the completion of the adjustment of the sales distribution system, the outpatient market will drive the continuous growth of major varieties.
Dacinib, a new Class 1 drug, can be expected to be marketed, and the innovative pipeline is gradually entering the harvest period. In 2022, the company spent 367 million yuan (+10%) on research and development, and the company's new drug is gradually entering the harvest period. Didacinib is the first Class 1 new drug to treat insomnia patients to be marketed in more than 10 years. It will change the current drug usage pattern, and sales are expected to be rapidly released. The new rehabilitation enteric capsule is about to begin phase III clinical trials. In the field of precision, the JX11502MA capsule phase II clinical trial is progressing smoothly. More than 10 research projects are progressing in an orderly manner, and varieties are entering the clinical stage one after another, involving indications such as depression and Parkinson's.
Profit forecasting, valuation analysis and investment suggestions: The company's finished drug collection risks have basically been cleared, and the gradual launch of innovative drugs is expected to drive rapid growth. We expect the company's revenue from 2023 to 2025 to be 4,094 billion yuan, 4.587 billion yuan; net profit to mother of 656 million yuan, 754 million yuan, and 903 million yuan, corresponding to EPS of 0.76, 0.88, 1.05 yuan, and PE 15.3, 13.3, and 11.1 times. The first coverage gave a “buy-B” rating.
Risk warning: risk of industry policy changes, R&D risk, environmental risk, talent shortage risk, etc.