The development of the company has entered a new stage, covering the "buy" rating for the first time. Lingrui Pharmaceutical is a leading domestic plaster enterprise. after the completion of the restructuring in 2011, the company's performance has grown steadily and the management quality has been continuously improved. The company has recently implemented a restricted stock incentive plan and an employee stock ownership plan, demonstrating its confidence in future performance growth. We estimate that the income from 2021 to 2023 will be 27.01Compact 30.97 / 3.539 billion, an increase of 15.8%, 14.7%, 14.3%, and the net profit of home will be RMB 377, 453,554 million, an increase of 15.9%, 20.0%, 22.4%, and the current stock price will be 15.0%, 12.5%, 10.2 times of PE respectively, giving a "Buy" rating for the first time.
Aging and rising consumption will drive the patch market to continue to grow. according to the data of the seventh national census in 2020, the proportion of people aged 65 and over in China has reached 13.50%.
As the post-60 "baby boomers" enter the age group over 60, the trend of aging in China will continue. The incidence of osteoarthritis, joint pain, hyperosteogeny and other diseases in the elderly population is higher than that in the young population. It is expected that the demand for topical patch will continue to grow. On the other hand, there are a large number of long-tail products with low unit price but large sales in the proprietary Chinese medicine patch market. We believe that with the increase of per capita health care expenditure, the proprietary Chinese medicine patch market will also usher in consumption upgrading, which lays a good foundation for the expansion of the out-of-hospital self-expense market of brand OTC drugs and the improvement of customer unit price brought about by product upgrading. The company's core product Tongluo Qutong Ointment is expected to further increase its market share by virtue of its brand and therapeutic advantages in the future, and will continue to grow steadily in the medium and long term.
The echelon of products is perfect, and many varieties have the potential for growth.
In addition to Tongluo Qutong ointment, many of the company's second-tier varieties also have growth potential. The sales of Zhuanggu Musk pain Ointment has reached about 700 million posts per year in recent years, with a good market foundation and a wide audience. The company has upgraded its original products, and its gross profit margin and gross profit margin per post have also increased after the upgrade. It is expected that the growth rate of revenue and gross profit will exceed the growth rate of sales. After the reform of the marketing system, the ointment products give full play to the sales advantages of the company in the OTC channel, and the soft income will grow rapidly in 2020. At present, the sales scale of fentanyl transdermal patch is small, but with the improvement of pain management level of cancer patients and the promotion of standardized pain treatment, fentanyl transdermal patch still has great potential in the medium and long term.
Risk tips: product sales are not as expected; market competition intensifies.