Main points of investment
Event: the company's annual income in 2020 was 6.485 billion yuan, an increase of 20.36% over the same period last year; net profit of 930 million yuan, an increase of 63.24%; net profit of 816 million yuan, an increase of 81.38% over the same period last year; operating cash flow of 1.555 billion yuan, a decrease of 11.32% over the same period last year; revenue of the company in the first quarter of 2021 was 1.497 billion yuan, a decrease of 4.69% over the same period last year The net profit was 255 million yuan, an increase of 15.6% over the same period last year, while the non-return net profit was 150 million yuan, a decrease of 23.98% over the same period last year.
With a high growth in performance in 2020, the leading advantage of the integration of API preparations is significant. In 2020, Q4 achieved revenue of 1.615 billion yuan (+ 17.30%, year-on-year growth in parentheses, the same below) and net profit of 89.28 million yuan (+ 54.45%). The annual performance was slightly lower than our expectations. From a business point of view, in 2020, the company achieved an income of 3.102 billion yuan (+ 25.12%) for API products, 1.936 billion yuan (+ 34.86%) for cardiovascular APIs and 766 million yuan (+ 2.33%) for nervous system APIs. The income of the product of the realized preparation was 3.098 billion yuan (+ 19.89%), the income of the central vascular preparation was 1.753 billion yuan (+ 59.08%), and that of the nervous system preparation was 911 million yuan (+ 9.14%). Especially in the production of preparations, the company achieved an annual output of 8.6 billion tablets, reduced the processing fee of 10,000 naked films by 2%, and increased the efficiency of packaging production by 8%. The company's API preparation integration advantages continue to highlight.
Overseas has the export advantage, the domestic significant benefit collection, the company preparation is expected to continue to release. The main varieties of Huahai Pharmaceutical preparations include valsartan tablets, losartan potassium tablets, paroxetine hydrochloride tablets and so on. In terms of APIs, the company is the world's leading supplier of Puli and sartan APIs. In terms of overseas markets, by the end of 2020, the company has 66 ANDA documents in the United States, of which more than 10 products have the highest market share in the United States. In the domestic market, the company's preparations are collected and the products are accelerated in the domestic market. In 2020, the annual sales of losartan potassium tablets and irbesartan hydrochlorothiazide tablets have exceeded 500 million yuan. With the normalization of subsequent national collection, the company is expected to continue to increase the permeability of preparation products.
The announcement of the equity incentive plan shows confidence in long-term and sound development. The company announced the draft equity incentive plan for 2021, which proposes to grant 45.65 million restricted shares to a total of 625 people, accounting for 3.14% of the total share capital before the announcement. The performance evaluation target is based on net profit in 2020, and the compound growth rate of net profit in the next three years is not less than 20%. The equity incentive is granted to a wide range of targets, which helps to bind the interests of the core personnel, and shows the company's confidence in the long-term and steady development of performance.
Profit forecast and investment rating: as the company's preparation and API volume are slightly lower than our expectations, we lower the company's return net profit of 1.616 billion yuan in 2021-2022 to 1.209 billion yuan. It is estimated that the net profit will be 1.914 billion yuan in 2023, and the current market capitalization corresponding to PE in 2021-2023 is respectively times that of 26-21-17, considering that the compound growth rate of the company's return net profit in the next three years is expected to reach 27%. There is plenty of room for long-term development, and the "buy" rating is maintained.
Risk tips: API price fluctuations, follow-up collection volume is not as expected, etc.