Event Overview
The company issued a forecast for the first quarter of 2021, during the reporting period, the company is expected to achieve a net profit of 7841.01-86.5214 million yuan, yoy+45%-60%; to achieve non-return net profit of 5848.30-63.7997 million yuan, yoy+10%-20%. The company's first-quarter results exceeded expectations.
Analysis and judgment:
Various business sectors resonate, supporting the continuous improvement of performance compared with the previous month.
During the reporting period, the company's performance continued to improve in the fourth quarter of 2020, with an estimated return net profit of 7841.01-86.5214 million yuan and yoy+45%-60%; deduction of non-return net profit of 5848.30-63.7997 million yuan, yoy+10%-20%. We believe that the main reasons for the company's outstanding performance in the first quarter are as follows: 1) through the adjustment of the sales channels of domestic chlortetracycline products, the sales of chlortetracycline products have gradually improved; 2) with the gradual stabilization of the epidemic situation at home and abroad, the company's chlortetracycline exports showed a trend of improvement compared with the previous month; 3) with the gradual recovery of downstream pig production capacity, the company's animal vaccine sector continued to develop, contributing to the company's profit elasticity. 4) the subsidiary Fama Wei Pharmaceutical Co., Ltd. generated a profit of US $3.29 million, equivalent to RMB 21.5432 million, from the sale of the drug number, which had a great impact on the growth of the net profit of returning home in the current period.
Feed ban promotes the demand for chlortetracycline, and production capacity expansion supports high performance.
We believe that the implementation of the feed prohibition policy is very good for the company. the main logic lies in: first of all, the feed prohibition policy explicitly forbids the approval numbers of 15 drug feed additives, including oxytetracycline and flavomycin, and retains the use of chlortetracycline in treatment, which makes room for the expansion of chlortetracycline market space. Secondly, before the implementation of the feed ban policy, the company's chlortetracycline products were mainly aimed at feed manufacturers, which were greatly restricted by downstream feed manufacturers. After the implementation of the feed ban policy, the company's chlortetracycline products were directly oriented to the breeding terminal, and the market coverage has been greatly improved. Finally, before the implementation of the feed prohibition policy, the addition standard of feed for promoting growth was 25-75ppm. after the implementation of the feed ban policy, the standard was raised to 400-600ppm, and the usage was greatly increased. Based on the continuous improvement of domestic demand for chlortetracycline, the company's capacity expansion plan for 52000 tons of chlortetracycline is steadily advancing and is expected to be put into production in the first half of next year. With the gradual release of chlortetracycline production capacity, chlortetracycline is expected to contribute to the company's short-term profit elasticity.
With the help of the four major R & D platforms, the development prospect of veterinary vaccine is promising.
The company has laid out veterinary biological products for many years and acquired Hangzhou Youben in 2015. The products cover pigs, poultry, cattle and sheep vaccines. The main products include blue ears and rings. The income of blue ears has exceeded 100 million yuan. With the continuous improvement of the company's product recognition, the company's biological products plate ushered in a period of rapid development. At present, the company has four major technical platforms: antigen industrial mass production technology platform, genetic engineering subunit antigen construction technology platform, antigen purification technology platform and antigen quantitative detection technology platform. The product research and development and production capacity are excellent. The previous layout of Bovine and Sheep brucellosis, Porcine foot-and-mouth Disease, rabies inactivated vaccine and other varieties will be on the market this year and next year. It is expected to support the rapid release of profits from the company's veterinary vaccine sector.
Investment suggestion
With the joint efforts of chlortetracycline and veterinary vaccine, the company's profits are expected to be accelerated. We estimate that from 2021 to 2023, the company's EPS will be 0.43, 0.74 and 0.92 yuan, respectively, and the current share price will maintain a "buy" rating corresponding to a PE of 13, 8 and 6X, respectively.
Risk hint
The risk of rising prices of raw materials, the risk of abnormal exchange rate fluctuations, and the risk of policy disturbance.