Events:

Heypree released its three-quarter report for 2022, with revenue of 5.395 billion in the first three quarters, an increase of 16.49% over the same period last year, a net profit of 652 million, an increase of 41.33%, and a deduction of 627 million of non-return net profit, an increase of 53.72% over the same period last year. In the third quarter, the company achieved revenue of 1.637 billion, an increase of 7.83% over the same period last year, and a net profit of 141 million, an increase of 14.41% over the same period last year, slightly lower than expected.

The export of preparations continues to grow, and the business of APIs is disturbed overseas.

Preparation exports continued to be strong in the first three quarters. Sales of enoxaparin preparations in the European market increased by 26.2% compared with the same period last year; sales in the US market increased by 144.6%; sales in the domestic market increased by 77.5%; sales in non-European and American markets were close to that of last year. Due to more Q3 purchases last year, Q3 went out of inventory this year, resulting in a decline in sales in a single quarter. Q3 preparation revenue increased by about 12% compared with the same period last year. On the pharmaceutical side of raw materials, revenue fell by 7% in a single quarter compared with the same period last year, which is mainly due to the decline in heparin APIs sold by SPL and the limited improvement in gross profit margin due to the high price of crude heparin purchased in the United States.

Continue to be optimistic about the export of preparations and the improvement brought about by falling domestic costs in the heparin industry. Hypri's enoxaparin preparations have maintained rapid growth in the United States and Europe, and the overall growth rate is expected to accelerate after destocking in other regions; the purchase price of crude heparin fell in the first half of this year compared with the same period last year, and the improvement is expected to be transmitted to APIs and preparations. Q3 income tax increased by about 50 million due to the conversion of debt to subsidiaries, resulting in a slightly lower-than-expected profit growth for the current period. The whole industry chain of Heparin provides short-term performance support, and the introduction of bio-drug CDMO+ innovative drug project is expected to bring new performance driving force to the company.

Earnings forecast, valuation and rating

We estimate that the company's income from 2022 to 24 will be 77.62 CAGR 90.17 / 10.65 billion, with a corresponding growth rate of 21.95%, 16.16% and 18.12%, respectively, with a net profit of 10.88max 13.49 / 1.701 billion, a corresponding growth rate of 351.68%, 24.02% and 26.08%, respectively, and a 3-year EPS of 91.86% and 0.74, 0.92 and 1.16 respectively. The value per share of the company measured by the DCF absolute valuation method is 19.92 yuan. According to the segment valuation under the relative valuation method, the average value of reference chemicals is 23 times PE and that of CDMO is 47 times PE, and the value per share is 23.59 yuan. Combining the above valuation methods, the target price for 2023 is 19.92 yuan and the "buy" rating is maintained.

Risk hints: raw material price rise risk; preparation product price drop risk; CDMO order is not as expected; innovative drug development is not as expected; enoxaparin sodium collection is not as expected