Items:
On July 26, the company released its 2021 semi-annual report. In the first half of the year, the income was 692 million yuan (up 6.21% over the same period last year), the net profit was 116 million yuan (9.84% over the same period last year), and the non-net profit was 98 million yuan (1.39% over the same period last year). The growth rate was slightly lower than the previous market expectations.
Comments:
The company's API performance is under pressure due to the influence of Satan price and exchange rate. In the first half of 2021, the revenue of the company's API business reached 454 million yuan, a slight decline compared with the same period last year. We expect to be mainly affected by the appreciation of the RMB exchange rate and the decline in the price of Satan. During the reporting period, the company accelerated the promotion of new product R & D registration programs to expand the existing API market in China and standardized market access in Europe and the United States. Valsartan (new process) has obtained the European Union CEP certificate; the new domestic CDE registered products include esomeprazole magnesium, moxifloxacin hydrochloride, sioglitine phosphate and rosuvastatin calcium. We believe that with the further enrichment of new API varieties and the release of old ones, the company's API business is expected to return to the track of steady growth.
Driven by many factors, CDMO business continues to grow at a high speed. In the first half of 2021, the company's CDMO business achieved revenue of 106 million yuan, an increase of 113.40% over the same period last year. Since 2020, relying on the new and complete multi-function GMP production capacity of Xuancheng Minohua, the company's CDMO business has embarked on the fast track of development. In the short and medium term, with the continuous growth of the number of customers and the rapid improvement of the number of projects, the company's CDMO business is still expected to achieve high-speed growth under a small base. In the long run, the company's CDMO business has reached a strategic cooperation with Mershadong Animal Insurance and entered the capacity circle of MNC pharmaceutical companies. With the further promotion of cooperation with Merck Sha Dong and the development of new customers of MNC pharmaceutical companies, the company has a broad space for CDMO business growth.
The preparation business entered the harvest period, and a great breakthrough was made in the self-management preparation business in the first half of the year. In the first half of 2021, the company's preparation business achieved revenue of 64 million yuan, an increase of 47.08% over the same period last year. Of this total, the revenue of the self-developed preparation business reached 17 million yuan, an increase of 3309.49 percent over the same period last year. According to the disclosure of the company's semi-annual report, the terminal volume of perindopril and pregabalin is in good condition. as of June 30, the shipment of perindopril tert-butylamine tablets has exceeded 56% of the quantity in the first year. Prebar capsule shipments have exceeded about 47% of the quantity in the first year, and it is expected that the annual sales volume will significantly exceed the agreed purchase volume, which will give a big boost to the company's performance. In addition, the company's existing 8 preparation products jointly developed with KRKA strategy are under CDE review in China, and are expected to be approved and listed in succession from the second half of the year to 2022. We believe that with the continuous approval of these new preparations on the market, the company's preparation business is expected to bring continuous performance increments for the company.
Profit forecast, valuation and investment rating. We estimate that the company's net profit from 2021 to 2023 will be 2.28,3.00 and 392 million yuan respectively, an increase of 36.6%, 31% and 30.7% respectively over the same period last year. The current share price is 2021-2023 PE times 23-18-14. Considering the excellent business capacity and clear growth space of the company's API, preparation and CDMO, we believe that a higher valuation level should be given appropriately. It will be given 35-40 times PE in 2021, corresponding to the target range of 53.50-61.1yuan, and maintain the "recommended" rating.
Risk tips: 1, the project does not meet expectations; 2, the approval progress is delayed; 3, the risk of product price reduction.