九洲药业(603456):全面布局 跨越向上

Jiuzhou Pharmaceutical (603456): The overall layout leaps forward

華泰證券 ·  05/01  · Researches

Revenue/profit maintained an upward trend, and profitability climbed

The company announced 2022/1Q23 results on April 27:1) 2022 revenue/net profit attributable to the mother was 54.5/9.2/93 billion yuan (+34/45/ 62% yoy), and the performance was in the median forecast; 2) 1Q23 revenue/net profit/net profit after returning to the mother was 17.5/28/270 million yuan (+27/35/ 40% yoy). We expect the company's net profit to the mother for 2023-25E is 12.2/16.5/2.03 billion yuan (previous value 2023/24 is 1,28/1.68 billion yuan), the corresponding EPS is 1.36/1.83/2.25 yuan, and the SOTP method is used to grant CDMO (23E-25E profit CAGR is 34.04%) and the APIs 2023 PEG 1.06x and PE24.05x (comparable companies are 1.06x and 24.05x respectively. Comparable companies are 1.06x and 24.05x respectively. The CDMO business is comparable to companies that are comparable companies The CAGR estimate included the 25-year results. The impact of COVID-19 orders on CAGR and valuation weakened; we removed the valuation discount), and gave a target price of 46.22 yuan (previous target price: 62.69 yuan) to maintain buying.

The rapid increase in downstream products drove the strong growth of CDMO. The project team continued to expand, and CDMO achieved revenue of 3.42 billion yuan (+48% yoy) in '22:1) The core cardiovascular category achieved revenue of 1.94 billion yuan (+57% yoy), mainly due to the expansion of the downstream drug Entresto's patient pool and the expansion of indications (Novartis's announcement showed 2022/1Q23 revenue of 46/14 billion US dollars, +37/ 32%); 2) Anti-tumor revenue of 650 million yuan (+52% yoy), benefiting from Kisqali Downstream formulation volume (2022/1Q23 revenue of US$12.4 billion, +38/ 81%); 3) Diversification of major customers while increasing development in new fields such as veterinary medicine. As an export-oriented CDMO company, the company's business stability is strong and early pipeline expansion was rapid. As of the end of '22, it had already listed 26/61/764 projects, an increase of 6/12/182 over '21.

Production capacity construction has advanced rapidly, and service capacity has been comprehensively deployed

In 2022, the company's fixed assets/projects under construction were 2,29/84 billion yuan (+6/ 78% yoy), and the expansion of production capacity continued: 1) the company expects the first phase of Ruibo's new base in Taizhou to be put into use in 24; 2) the automation transformation of Zhejiang Rebo, Pharmaceutical Technology, etc. will reduce costs and increase efficiency, and the capacity utilization rate of the latter is expected to continue to rise; 3) the construction of the second phase of Ruibo's US pilot plant continues to advance. In addition, the company's business layout has accelerated: 1) The construction of the peptide production line has been completed, and the Ruibo Suzhou pilot plant is expected to be put into use 1H23; 2) the pharmaceutical business is fully laid out, the acquisition and delivery of Kangchuanji Pharmaceutical and Ruihua Zhongshan has been completed, and the first phase of Siwei Pharmaceutical's workshop undertakes customer orders, and a one-stop service capacity for formulations has been formed; 3) Order acceptance is gradually being carried out in the small nucleic acid/XDC field.

The API business is growing steadily

In 2022, the company's API business achieved revenue of 1.64 billion yuan (+25% yoy), and the core sector of anti-infective/central nervous system achieved revenue of 59/ 560 million yuan (+31/45% yoy). The gross profit margin was 30.5%, down 2 pct from the same period in '21 due to higher upstream costs. Considering the accumulation of advantages in the company's main varieties over the years, we expect the raw materials business to maintain a steady growth trend.

Risk warning: The progress of downstream formulation releases fell short of expectations; the production transfer progress of overseas commercialized varieties fell short of expectations; the increase in the number of early projects fell short of expectations.

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