Items:
According to the 2021 semi-annual report, the company realized income of 776 million yuan, down 4.97% from the same period last year; realized net profit of 152 million yuan, down 30.51% from the same period last year; and realized net profit of 137 million yuan after deducting non-return, down 34.13% from the same period last year. The company's performance was slightly lower than expected.
Safety point of view:
The half-year performance was slightly lower than expected, and the increase in the price of raw materials led to a decline in profitability: 2021H1 achieved an income of 776 million yuan (- 4.97%) and a net profit of 152 million yuan (- 30.51%), slightly lower than previously expected. The company's profitability has declined, with a gross margin of 35.23% (- 8.98 pp) and a net profit margin of 19.57% (- 7.64 pp). We believe that the decline in gross profit margin is mainly due to the increase in the price of the company's core raw material 6-APA. According to WIND data, the average price of 2021Q1 6-APA is about 225yuan / kg, compared with about 160yuan / kg in the same period last year, while the price of 2021Q2 further rose to 260yuan / kg, compared with 195yuan / kg in the same period last year. The cost increased during the period, including 1.64% of sales expenses (+ 0.42 pp), 6.69% of management expenses (+ 0.65 pp), 4.49% of R & D expenses (+ 0.69pp) and 0.32% of financial expenses (- 0.04 pp).
It is expected that the volume and price of some core products will decline to a certain extent: 2021H1's raw material drug income is 242 million yuan (- 23.96%), gross profit margin is 42.11% (- 9.68 pp); intermediate income is 490 million yuan (- 0.81%), gross profit margin is 29.06% (- 10.04 pp); preparation income is 8.78 million yuan (+ 160.46%), gross profit margin is 74.74% (- 5.61 pp). We expect that the energy and price of some products will decline to a certain extent.
The products under research and fund-raising projects are promoted rapidly to provide growth assistance: 2021H1 invested 34.81 million yuan (+ 12.25%) in R & D, of which citafloxacin API has been submitted for registration, and Entratabine and Avibatan have completed the pilot test. Among them, avertam is a new generation of long-acting β-lactamase inhibitors with broad market space. Weifang Altong 616t Nawei intermediate has entered the trial production stage, and through cooperation with Lingfu Research Institute, it will extend to the industrial chain of antiviral products and accumulate CDMO experience; the process equipment of the first phase of Fuxiang biomedical project is being installed, and the completion of 600t 4AA and 200t meropenem capacity will further enhance the company's dominant position in Peinan products.
It is optimistic that the company will gradually release the performance pressure and maintain the "recommended" rating: the company is a leading enterprise of β-lactamase inhibitors, APIs and intermediates, as well as major suppliers of Peinan. at the same time, it actively expands the field of antiviral and has a broad space for growth. Considering the short-term performance pressure, we lowered the company's EPS forecast for 2021-2023 to 0.55,0.62,0.71 yuan (the original forecast was 0.65,0.75,0.89 yuan). The current stock price corresponds to 22 times of PE in 2021, and the company's stock price has been in a reasonable range after the recent correction, maintaining the "recommended" rating.
Risk hints: 1) market competition risk: if there are new competitors in the company's products, it will lead to product price decline risk; 2) R & D risk: the company is actively engaged in new product research and development, but there is a risk of failure or failure; 3) Safety and environmental protection risk: the company is in a high pollution industry, there is a risk of safety and environmental protection accidents.