Net profit in 2020 is expected to decline in single digits compared with the same period last year, with a target price of 13.65 yuan, maintaining the "overweight" rating company as an integrated platform for infusion and preparation, and has recently made progress in research and development, foreign mergers and acquisitions and product overevaluation / approval. demonstrate its strategic transformation determination. Looking back to 2020, we expect the company to show a decline in single-digit net profit (weak transfusion sales due to the decline in outpatient volume under the epidemic, and some preparations affected by base drug adjustment / collection price reduction). Looking forward to 2021, we expect that terminal demand will rebound after the epidemic, and individual new products will win the bid or provide increments, but some of them will still face the pressure of collection and downgrading. To sum up, we slightly reduced the company's EPS to 1.05 PE16.3 1.14 yuan in 20-21-22 (the previous 1.04 pound 1.12 pound 1.23 yuan), and gave it a 21-year PE13 times (taking into account the negative risk of the company's subsequent collection, a discount of 20% compared to the comparable company's 21-year PE16.3), with a target price of 13.65 yuan (13.52-14.56 yuan).
Infusion: the drag of the epidemic is gradually narrowing. We expect the transfusion sector to maintain a decline in the first three quarters of 2020 (1-3Q20 revenue decline 19% year on year), and is expected to recover gradually in 2021. The main reason: 1) the decline in 1Q20 outpatient hospitalization has a great impact on the infusion plate. With the effective control of the epidemic and the restoration of hospital order, terminal demand gradually rebounded with the effective control of the epidemic and the restoration of hospital order. We do not expect the decline to expand further in 2020. 2) the high value-added BFS is expected to decline due to the epidemic in 2020, but as the company's exclusive and market-leading variety, it is promising to continue to replace low-end packaging materials; 3) the income of soft bags / plastic bottles / glass bottles may show a double-digit year-on-year decline in 20 years, and we expect that as the outpatient clinic returns to the pre-epidemic growth level in 2021. 4) the proportion of therapeutic infusion varieties is expected to rise gradually, and it is optimistic that the subsequent listing of new products will promote the gross profit margin of the infusion plate to rise.
Chemical drugs: with the continuous development of second-tier new products, we expect the pharmaceutical sector to see a year-on-year decline in single digits of income in 20 years (6% in 1-3Q20 chronic diseases and 2% in specialties), and return to 5-10% year-on-year income growth in 21 years, mainly due to:
1) the chronic disease sector is expected to maintain a single-digit year-on-year decline in 20 years. Among them, the grass-roots demand of Jiangya No. 0 is steady, and it is still expected to grow positively in the past 20 years, and amlodipine besylate shows a downward trend. Suiyue / Fusuiyue (we expect more than 30% year-on-year income growth in 20 years) and hypoglycemic products (metformin sustained-release tablets, voglitine, etc.) or rapid release, pivastatin is expected to grow positively in 20 years, but it may decline after 21 years. 2) the income of the specialist sector may be flat in 20 years, although children's amino acids have declined due to the epidemic, the nephrology / mental field is expected to show double-digit growth and may maintain this trend for 21 years.
Strategic layout: strengthen R & D and innovation, endogenesis and epitaxy are faced with low-growth large infusion market and national generic drug collection pressure, the company seeks strategic transformation: 1) backed by abundant cash on paper (9M20:22.7 billion yuan), the company integrates the previously dispersed R & D team, and is expected to continue to increase R & D investment throughout the year (it is also planned to invest 400 million in R & D center projects in the near future) 2) actively promote the generic drug cluster (a total of 10 + varieties have been overrated at present), in which metformin sustained-release tablets / finasteride tablets / valsartan capsules / voglitine tablets and other new products have won the third batch of bids, and are optimistic to grab market share, superimposed with newly listed caffeine citrate and Preba capsule to thicken the pediatric / neurological product line. 3) increase the distribution of innovative drugs and biological drugs, add the pace of Becton Dickinson & Co (the company acquired a 39% stake in Dongying Tiandong in December 20, focusing on its anticoagulant heparin drugs), endogenesis + epitaxy to accelerate the transformation.
Risk hint: the recovery rate of large infusion is slower than expected, the collection of varieties and price reduction are higher than expected, and the progress of research and development has slowed down.
