Report summary
Qianhong Pharmaceutical is a leading manufacturer and operator of polysaccharides and protease drugs in the domestic biochemical pharmaceutical industry. It is also currently one of the few domestic pharmaceutical manufacturers covering the entire heparin industry chain. The company's main products are two major biochemical drugs, active enzymes and polysaccharides. Among them, active enzyme varieties mainly include pancreatic peptidogenase series, aspartamase series, and compound digestive enzyme capsule II; polysaccharide varieties mainly include heparin sodium and low molecular weight heparin series.
Key points of investment
The export price of heparin is low, and it may be expected to bottom up and reverse in the future
China is the world's largest exporter of heparin APIs. Fluctuations in the supply and price of heparin APIs in China will have a significant impact on the global heparin market. The export price of heparin APIs fell from 15,800 US dollars/kg in June 2021 to 0.61 million US dollars/kg in November 2023. We believe that the current export price of heparin APIs is at a historically low level, and it may be expected to reverse in the future.
The layout of the entire heparin industry chain means that the company has lower inventories and is more effective
The company and Muyuan Co., Ltd. jointly invested in the establishment of the joint venture Henan Qianmu to lay out the entire heparin industry chain.
2023H1's overall inventory is 766 million yuan, which is low among peers. Judging from the inventory structure, the absolute amount of the company's raw materials is 400 million yuan, which is lower than that of peers. There is more room to store raw materials in the future, and it will be more effective during the period when upstream raw materials are low.
Innovative transformation has been effective, leading CDK9 inhibitor development
The company's innovation and transformation have been very effective. In terms of new drug development, four research pipelines have now entered the clinical stage. The product under development, QHRD107 (indicated for acute myeloid leukemia), is a new CDK9 kinase inhibitor class I drug pioneered by the company. Currently, several patients have been enrolled in phase II clinical trials. This product is expected to provide patients with more treatment options, and we believe the company's pipeline may have good market potential.
Profit forecasting and valuation
We expect the company's total revenue for 2023-2025 to be 19.65/21.66/ 2,493 billion yuan, with year-on-year increases of -14.70%/10.21%/15.10%, respectively; net profit attributable to shareholders of listed companies will be 2.32/3.07/400 billion yuan, and EPS 0.18/0.24/0.31, respectively. Considering that the company is an excellent enterprise for heparin preparations and APIs, and that the company's innovation and transformation has been very effective, we are optimistic about the company's future development. The first coverage was given. We gave 2024 24 times PE and a target price of 5.76 yuan/share, giving it an “gain” rating.
Risk warning: Drug collection policies have subjective risks on the risk of falling product sales prices, increased investment in new drug research and development on profits, risks caused by tightening environmental protection policies on operations, product quality risks, and increased operating costs.