Main points of investment
Event: 1) the company released its annual report for 2021, with annual income of 6.37 billion yuan (+ 19.4%), net profit of 240 million yuan (- 76.5%) and non-net profit of 90 million yuan (- 84.8%). 2) the company released its quarterly report for 2022, with 2022Q1 income of 1.91 billion yuan (+ 50.7%), net profit of 240 million yuan (+ 63.7%) and non-net profit of 170 million yuan (+ 44.8%). The overall performance was in line with expectations.
Operating income growth is steady, and changes in investment income and fair value affect profit growth. The company's revenue grows steadily in 2021, and the fluctuation at the profit end is mainly caused by the change of investment income and fair value. On a quarterly basis, 21Q1/Q2/Q3/Q4 revenue is 1.73 billion yuan (- 9.6%, 46.8%, 71.8%, 3.1%), thanks to the sales strength of enoxaparin and API, and the steady growth of CDMO business. The return net profit is 1.4 billion yuan (- 43.8%). The profit fluctuation is mainly caused by the company's investment income, the change in the fair value of its Kymab stake and the impairment of investment project assets. Excluding the net profit of 560 million yuan (- 9.5%) for investment projects in 2021, there is still a decline in the year-on-year high base. 2022Q1 revenue 1.91 billion yuan (+ 50.7%), strong growth momentum; return to the mother net profit of 240 million yuan (+ 64.9%), the profit end rebounded significantly.
Profitability: 2021 and 2022Q1 gross profit margin are 31.9% (- 7.2ppt) and 30.3% (- 2.6ppt) respectively. The decline of gross profit margin is mainly caused by the increase in the price of raw materials of heparin and the lag of cost accounting of sales transmitted by purchase price. Expense rate: in 2021, the company management rate / sales rate / R & D rate / financial rate is 6.6%, 6.8%, 3.5%, 5.8%, respectively, compared with the same period last year. 1.1ppt/-0.9ppt/+0.5ppt/-3.4ppt, the sales and management rates are relatively stable, and the changes in financial rates are mainly caused by interest expenses and exchange gains and losses.
Heparin preparation business growth is strong, Enuo API is expected to become a new growth point. In 2021, the company's heparin industry chain income was 5.36 billion yuan (+ 26.89%), including preparation business income of 2.64 billion yuan (+ 73.2%), global sales of more than 180 million units (+ 72.6%). Overseas: in 2021, sales of enoxaparin sodium in Europe and the United States exceeded 130 million (+ 49.26%) and 13 million respectively; sales in non-European and American overseas markets increased by more than 300% compared with the same period last year; domestic: enoxaparin sodium preparations have won bids for Shandong, Guangxi and other provincial collection, and sales in the Chinese market increased by 16.2% compared with the same period last year. Heparin APIs are under short-term pressure due to the price of raw materials and the epidemic. In 2021, the company's Enuo API revenue increased by 48.8% year-on-year, and sales increased by 31.2% year-on-year, which is expected to become a new growth point.
CDMO business is steadily rising, and a number of innovative drugs are progressing smoothly. In 2021, the company's CDMO income is 810 million yuan, of which the subsidiary Saiwan biological income is 690 million yuan (+ 17.3%), and the order on hand is more than 100 million US dollars, which is conducive to the company's macromolecular CDMO business expansion and resource integration. The company's pioneering new drug pipeline has been gradually improved, holding more than 20 First-in-class new drug rights and interests, covering more than 30 indications. The critical III phase of small molecular drug RVX-208 (Apabetalone) was approved by FDA in June 2020, and the application for listing of NDA may be submitted in the future. The second pre-IND application of mouse monoclonal antibody Oregovomab was completed in China at the end of 2021. α-toxin whole human monoclonal antibody AR-301 (Salvecin) was approved as FDA fast track and EMA orphan drug, and the first Chinese patient in phase III clinic was enrolled. H1710, a new heparin derivative, is in the IND declaration stage.
Profit forecast and investment advice. It is estimated that the net profit from 2022 to 2024 is 540 million yuan, 580 million yuan and 720 million yuan respectively, corresponding to 33 times, 26 times and 22 times of PE. With the integration of heparin APIs and preparations, macromolecular CDMO+ innovative drugs open room for growth and maintain a "buy" rating.
Risk tips: enoxaparin preparation sales are not as expected, innovative drug research and development failure risk.