Since its establishment 27 years ago, the company has focused on research and development of new proprietary Chinese medicines. It is a national high-tech enterprise integrating R&D, production and sales. Currently, the company has 32 pharmaceutical production approvals, including 10 varieties on the national medical insurance catalogue, 1 variety on the national essential drug catalogue, 12 over-the-counter (OTC) varieties, and 12 exclusive varieties. The company's products cover a wide range of fields and are gradually developing small molecule chemicals. Currently, it has three main R&D platforms: Guiyang Technology Center, wholly-owned subsidiaries, Haitian Pharmaceutical, and Shuofang Pharmaceutical, which are undertaking research and development work on traditional Chinese medicine formula particles, new indications for mass-produced products, new traditional Chinese medicine drugs, and ancient classics, respectively.
It has a total of eight dosage production lines and two production lines for Chinese medicine tablets, line A and line B for Chinese medicine tablets.
The company has a leading market position in the field of gynecology. The company ranked third among enterprises using proprietary Chinese medicines and gynecological medicines in public medical institutions in China in 2019, with a market share of 3.88%. Kuntai capsules are one of Xintian Pharmaceutical's leading products. They have been approved by the CFDA and can be used to treat menopausal syndrome and other related symptoms caused by decreased ovarian function. In 2020, Chinese public medical institutions ranked third for proprietary gynecological medicine products in Chinese public medical institutions, with a market share of 2.97%, and were selected in the “2020 Clinical Value Proprietary Chinese Medicine Brand List”. In recent years, overall sales of Kuntai capsules have been on an upward trend. The good therapeutic effects and popularity in the pharmaceutical market have made Kuntai capsules the leading product of Xintian Pharmaceutical, with sales peaking at 1.5 billion. In addition, sales revenue of bitter ginseng gel and summer hay grass oral liquid also increased significantly in 2021, further establishing the company's leading position in this field.
The market demand for urological drugs is high, the market share of proprietary Chinese medicine products is increasing year by year, and the company's leading products have maintained a high growth rate. In 2015, the market size of proprietary Chinese medicines for urological infections in China reached 5,529 billion yuan. In 2015-2017, the share of proprietary Chinese medicines in this market increased from 59.82% to 71.13%. The company's leading product in the urinary system is niobitai capsules. Nimbitai is an exclusive product of the company. By comparing the test group of antibiotics taken alone with Nimbitai capsules, it was confirmed that Nimbitai capsules can not only reduce inflammation of urinary tract infections, but also have a certain immunomodulatory effect. At the same time, Nimbitai capsules have an effect on improving urinary tract infections in women, type III prostatitis, and semen inliquefaction in men. Ning Bitai capsules are favored by doctors and patients. Sales in 2021 exceeded 200 million, with a growth rate of more than 30%. The future sales peak is expected to reach 1,068 billion yuan, making it the second largest product in Xintian Pharmaceutical.
Pay attention to the construction of R&D systems to ensure the smooth progress of the company's projects. The company continues to develop and optimize, forming a “234” R&D pattern, perfecting the R&D-production transformation system, achieving a seamless connection between laboratory R&D and industrial production of new traditional Chinese medicines and shortening the speed of product development to marketing. Second, the R&D system also covers all stages of discovery, R&D, production, and post-marketing evaluation of new Chinese medicines, complying with the requirements of national drug laws and regulations and traditional Chinese medicine research and development rules to ensure the company's smooth R&D projects. Xintian Pharmaceutical's R&D requirements are “production generation, reserve generation, and development generation”. Currently, the company has three new traditional Chinese medicine products that have completed phase III clinical trials, namely Longcen Pelvic Soothing Granules, Gugou Jieyin Gel, and Shuyuutong Granules.
Company profit forecast and investment rating: We expect the company's net profit for 2022-2024 to be $134, 178 and $236 million respectively, and the corresponding EPS is $0.82, 1.09 and $1.44 respectively. The current stock price corresponds to the PE value of 2022-2024 by 22, 16, and 12 times, respectively. As traditional Chinese medicine continues to receive increasing attention, the company, as an enterprise with its own proprietary Chinese medicine products as an advantage in the three fields of gynecology, urinary system, heat purification and detoxification, etc., we believe that the market share of the company's leading products is expected to continue to rise. We are optimistic that the company will achieve breakthrough results in R&D and promotion of new traditional Chinese medicines with a mature R&D and sales system, covering a “recommended” rating for the first time.
Risk warning: The risk that the revenue growth rate of major products falls short of expectations, and the results of research and development of new traditional Chinese medicines fall short of expectations.