华海药业(600521):医药先进制造龙头 国际化打开成长空间

Huahai Pharmaceutical (600521): Internationalization of advanced pharmaceutical manufacturing leaders opens up room for growth

中金公司 ·  10/10/2022  · Researches

Investment highlight

For the first time, Huahai Pharmaceutical Co., Ltd. was given an outperform industry rating (600521), with a target price of 24.54 yuan, which corresponds to a price-to-earnings ratio of 26 times the price-to-earnings ratio of 35pm in 2023, based on the pact E valuation method. The reasons are as follows:

Huahai Pharmaceutical Co., Ltd. is a leading pharmaceutical advanced manufacturing enterprise in China. Huahai Pharmaceutical Co., Ltd. was founded in 1989, headquartered in Linhai, Taizhou, Zhejiang Province, focusing on the integrated layout of API preparations, vigorously expanding foreign markets, is the first preparation through the United States FDA enterprises. In November 2021, FDA lifted the import ban on the base in southern Sichuan, and the company gradually resumed its business in the United States.

API: the traditional varieties are growing steadily, and the new varieties are gradually opening up. The company's APIs cover major varieties of chronic diseases such as sartan, prednisone and nerves. The company's API business achieved revenue of 2.77 billion yuan (- 11% YoY) in 2021, mainly due to overseas stock in 2020 and RMB appreciation in 2021; 1H22, revenue of 1.55 billion yuan (+ 20% YoY), mainly due to the rapid growth of the lifting of the US ban. As of August 2022, the number of APIs registered in the United States, the European Union and China is 85, 76 and 44 respectively, and the products cover cardiovascular, neurological, diabetes, antiviral and many other fields. The global layout of multi-products opens up room for growth.

Preparation: the leading domestic preparation export platform company. (1) Foreign preparations: the company has formed a multi-channel marketing system in the United States market, the sales network covers large and medium-sized drug buyers in the United States, and so far the main customers cover 95% of the generic drug market in the United States. American IQVIA statistics (data of May 2022), among the 43 products that the company sells in the United States, 24 products occupy the top three in market share, and the brand is recognized by the mainstream market in the United States. (2) domestic preparations: actively participate in collection, and the domestic preparation business is growing rapidly. As of August 2022, the number of domestic approved preparation varieties is 38, the company actively participated in the national collection, a total of 18 selected varieties, the selected area covers 31 provinces, municipalities and autonomous regions. In 2021, the company's domestic preparation income reached 1.43 billion yuan, 2.76 billion yuan, and achieved rapid growth.

What is the biggest difference between us and the market? Under the patent cliff, the API preemptive imitation and the first imitation have good growth, and we believe that there will be many important product patents expiring in the next 5 years to contribute important increments to the industry. We believe that the company has reached a turning point in the business cycle.

Potential catalyst: clinical progress of innovative drug project, approval of preparation varieties, etc.

Profit forecast and valuation

We estimate that the company's 2022 Universe EPS will be 0.70 Universe 0.96 yuan in 2023, and the CAGR will be 71%. The company is currently trading at 2022 Universe 27A 20 times earnings in 2023. For the first time, it gives outperforming industry ratings, giving the company a price-to-earnings multiple of 35 times 2022, corresponding to a target market capitalization of 36.407 billion yuan, a target price of 24.54 yuan, and a rising space of 26x and 27.9% in 2022 and 2023.


The increase in the price of upstream raw materials leads to rising costs and pressure on gross profit margin; excessive price reduction in collection leads to a decline in gross profit margin of the company's preparations; excessive proportion of overseas income; litigation risk.

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