Core ideas:
The quarterly report of Renhe Pharmaceutical Co., Ltd. showed steady growth and basically returned to the level of the same period in 2019.
The company realized operating income of 1.182 billion yuan in the first quarter of 2021, an increase of 34.08% over the same period last year, a decrease of 0.63% over the first quarter of 2019, and a net profit of 150 million yuan, an increase of 45.38% over the same period last year, down 2.26% from the first quarter of 2019. Basic earnings per share is 0.11 yuan per share.
The net interest rate increased slightly, and the quality of operation continued to improve. In terms of profit margin, the company achieved a gross profit margin of 39.84% in the first quarter of 2021, a decrease of 2.56 pct compared with the same period last year, and a net profit rate of 14.91%, an increase of 1.76 pct over the same period last year and 1.03 pct over the same period in 2019. The company's operating quality continues to improve. From the cost point of view, the company's R & D expenditure in the first quarter of 2021 reached 11.4 million yuan, an increase of 31.90% over the same period last year, and the R & D expenditure rate was 0.96%, an increase of 0.12pct compared with the same period in 2019, mainly due to the large R & D investment in the current issue of Gliclazide, dapoxetine, Tadanafil and sildenafil citrate.
During the reporting period, the company continued to promote the progress of various projects steadily and steadily to maintain the steady operation of the company. During the reporting period, the company continued to promote Renhe Xianghe industrial hemp project, traditional Chinese medicine classic prescription industrial upgrading project (by the end of 2020, the construction of pill workshop, solid workshop, liquid workshop and other projects had been completed), Renhe Wisdom Pharmaceutical Logistics Park project (the certification is expected to be completed in June 2021, the first phase of the project is expected to be put into use in July 2021).
The expected results for 21-23 years are 0.50 yuan per share, 0.57 yuan per share and 0.66 yuan per share respectively. Corresponding to PE15.88x/13.82x/12.03x. Considering that the company is gradually weakened by the impact of collection and acquisition, and the brand OTC business gradually returns to the normal growth channel, with reference to the comparable company valuation, we think it is appropriate to give the company an 18 times PE valuation in 2021, with a corresponding reasonable value of 9.0 yuan per share, maintaining a "buy" rating.
Risk tips. The increased competition in the industry leads to the risk that the sales of products do not meet expectations; the risk of negative effects on products is caused by industry policies.