Summary of the report:
The company recently released its semi-annual report for 2019, with revenue of 456 million yuan during the reporting period, an increase of 33.51% over the same period last year, and net profit of 53 million yuan, an increase of 29.68% over the same period last year. At the same time, the company intends to introduce the candidate IDH inhibitor (I111b) from the related party NMS to obtain its exclusive rights in clinical development, registration, production and marketing around the world.
China News maintained rapid growth, benefiting API companies put into production 2019Q2 revenue growth faster than Q1.
From a quarterly point of view, Q2 revenue in 2019 grew faster than Q1, because the API intermediate project that was put into production at the beginning of this year gradually realized its performance in the second quarter. If 37 million of API income is deducted, Q1 and Q2 revenue are nearly flat, and the company's sales are stable quarter by quarter.
The varieties of major injections continue to maintain high growth, and API companies gradually contribute profits. The main varieties of the company's injections are tolasemide, cefotiam, cefoxione, tegacycline, adenosine arabinoside, ganciclovir sodium and lansoprazole. During the reporting period, there was a product revenue growth rate of 0-30%. Four products exceeded 100% in 30-100%. Zhenjiang Derui, a wholly owned subsidiary of the company's API, was put into production at the beginning of the year, and 2019H1 contributed 37.586 million yuan in income. Maderi is expected to contribute more profits with the gradual development of the follow-up project.
NMS innovative drug project was introduced for the first time, and in-depth cooperation with NMS has been carried out ever since. I111b project is a new oral small molecule IDH (isocitrate dehydrogenase) inhibitor project being developed by NMS. It can inhibit tumor development by acting on IDH mutation sites in tumor cells. At present, the I111b project is still in the lead compound optimization stage, and NMS is expected to be delivered in 2020.
Company profit forecast and investment rating: we are optimistic about the long-term high growth of the company's injection business, and the introduction of overseas innovative drugs for the first time, and the deepening of innovation integration. We expect the company to achieve revenue of 9.1,11.5 and 1.35 billion in 2019, 2020 and 2021, with a net profit of 1.15,1.52 and 178 million respectively, with a corresponding valuation of 31.24,23.66,20.22 times.
Risk tips: injection sales are not as expected, API contributions are not as expected, and other risks.
