Incidents:
Borui Pharmaceutical released its 2022 annual report and the first quarter of 2023: in 2022, the company's revenue was 1,017 million yuan, a decrease of 3.33% over the previous year; net profit of the mother was 240 million yuan, a decrease of 1.77% over the previous year; net profit of the non-return mother was 214 million yuan, a decrease of 4.76% from the previous year.
In the first quarter of 2023, the company's revenue was 305 million yuan, an increase of 22.77% over the previous year; Guimu's net profit was 707.69,500 yuan, an increase of 16.48% over the previous year; after deducting non-return mother's net profit of 697.1112 million yuan, an increase of 15.58% over the previous year.
Key points of investment:
The company's pharmaceutical products use collection and accelerated release. The company relied on the original API business foundation to build an integrated platform for “API drug+formulation”. In 2022, the company's product sales revenue was 878 million yuan, a year-on-year decrease of 5.42%, of which pharmaceutical sales revenue was 100 million yuan, an increase of 102.46% over the previous year. The company's product sales revenue in the first quarter of 2023 was 268 million yuan, an increase of 19.90% over the previous year. Among them, pharmaceutical sales revenue was 467.5531 million yuan, an increase of 196.10% over the previous year. As an API company, the company's pharmaceutical products have a cost advantage. Products such as injectable micafenin sodium, agatriban injection, and oseltamivir phosphate dry suspension have all been successfully collected, and then released quickly through collection. At present, pharmaceutical revenue accounts for more than 15% of revenue. The company also obtained production approvals for injectable voriconazole and eribulin mesylate injections in the first quarter of 2023. In the future, as the company's pharmaceutical products are approved one after another, it is expected that pharmaceutical products will contribute more flexibility to the company's performance.
The company's production capacity will be implemented one by one, and production capacity constraints will gradually be eliminated, and the company's core business API sales revenue in 2022 was 777 million yuan, a year-on-year decrease of 11.51%. In addition to the causes of the pandemic and demand-side effects, production capacity is also a limiting factor. The Taixing API and formulation production base (phase I), which mainly involves antiviral products, has completed GMP inspection, and the Taixing API and formulation production base (phase II) involving fermented semi-synthetic products such as antimycotics is being prepared for trial production. Furthermore, the company's domestic and overseas pharmaceutical production capacity is also being built in an orderly manner.
The implementation of production capacity one by one will gradually remove the constraints of a shortage of production capacity.
The company's R&D investment continues to increase. In 2022, the company's R&D expenses were 207 million yuan, an increase of 19.47% over the previous year, and the R&D expenditure rate was 20.35%, an increase of 3.88 percentage points over the previous year. With high R&D investment, the company's key product development progress is progressing continuously. Currently, the carboxymaltose iron injection developed by the company relying on an abiotic macromolecule platform is in the pilot phase, and the API is in the stability stage; the company's inhalation softgels that rely on the pharmaceutical device combined platform are in the pilot phase, and the dry powder is in the small trial stage.
Profit forecasting and investment ratings As a high-barrier specialty API company, Borui Pharmaceutical has outstanding R&D advantages, a thick product pipeline, extensive business models, and a steady growth rate of performance.
Based on the revised profit forecast for 2022, the company's revenue for 2023/2024/2025 is expected to be 1,282 billion yuan/1,543 million yuan/2,053 billion yuan respectively, an increase of 26%/20%/33% over the previous year.
The corresponding net profit attributable to the mother was 290 million yuan/349 million yuan/463 million yuan respectively, an increase of 21%/20%/33% over the previous year. Corresponds to PE valuation 33.12X/27.53X/20.74X. The impact of the epidemic has been eliminated, the company's production capacity has been released one after another, and research and development of large varieties has progressed gradually. We are optimistic about the company's long-term development and maintain the “buy” rating.
The risk indicates the risk that the pace of development will fall short of expectations. The risk that the company's pharmaceutical products did not win the bid for collection. The company faces the risk of price reduction when it wins the bid for formulation collection. The cause of the epidemic affects the risk of the company's API exports. There is a risk that exchange rate changes will increase the company's API export costs.
Technology revenue fluctuates greatly, and there is a risk that advance payments will be returned.