Key elements of the report:
On April 28, the company released its 2019 annual report: during the reporting period, the company achieved revenue of 620 million, an increase of 4.96% over the same period last year; realized net profit of 63 million and 35 million respectively, down 33.04% and 47.55% respectively over the same period last year; realized net cash flow of operating activities of 63 million, down 14.16% from the same period last year; and realized 0.61% of EPS. Annual profit distribution plan: 1.6 yuan for every 10 shares.
At the same time, the company announced its operating results for the first quarter of 2020: affected by the epidemic this year, Q1 achieved revenue of 65 million, down 58.6% from the same period last year, and realized return net profit and deducted non-net profit of 4.3 million and-1 million respectively, down 85.76% and-103.47% respectively.
Main points of investment:
The annual performance is in line with expectations; Q1 performance is affected by the short-term impact of the epidemic. On the revenue side: annual revenue is 620 million, up 4.96% from the same period last year. Among them, the revenue of rat nerve products reached 394 million, down 28% from the same period last year. In recent years, due to the influence of industry policy and medical insurance control fees, the domestic market of rat nerve growth factor has gradually shrunk, but because this variety has been transferred out of the medical insurance catalogue, it will be mainly rigid at its own expense from this year onwards. We believe that the most severe impact period of policy on this variety has passed, and it will still contribute the main profits as mature cash flow products for some time in the future. Tianjin Hankang (CRO&CMO) achieved revenue of 140 million in the current period, while deducting non-return net profit of 50 million yuan; Hankang's revenue and net profit in 2019 accounted for a substantial increase compared with 2018, we are still positive about the rapid development of Tianjin Hankang business and the continuous improvement of the company's overall performance contribution. The operating performance of Q1 Company dropped sharply in 2020 compared with the same period last year, mainly due to the interference of the epidemic factors this year and the slow resumption of work at the Wuhan base in the first quarter; at present, the main business outside Hubei Province has basically returned to normal, which is expected to have a certain impact on the operation of the Wuhan base in the first half of the year.
The third phase of the CPT project was successfully completed, and the follow-up progress was smooth.
In late February this year, the company officially announced the results of the third phase of the CPT project: the CPT-MM301 project has reached the primary and key secondary end points preset in the trial, and the main end points (progression-free survival time) and key secondary endpoints (overall survival time, disease progression time, etc.) of CPT combined with thalidomide and dexamethasone treatment group (trial group). All were better than placebo combined with thalidomide and dexamethasone treatment group (control group), the difference of the above end points between the two groups was statistically significant, and the effectiveness and safety of the test group were in line with the expectations of the trial. At present, it is in the stage of registration and application of new drugs, and it is progressing smoothly. We expect CPT to file an NDA filing in the third quarter of this year and is expected to be approved for listing in 2021. As a new mechanism of action (DR4 / DR5), new antineoplastic drugs show good safety and efficacy in the treatment of refractory / recurrent MM, and are optimistic about the commercial performance of the first indication of CPT and the research progress in other indications.
Jingmen API base officially started construction, the future "CRO+CMO" business synergy is significant in mid-April, Hanrui Pharmaceutical (Jingmen) API base officially started, the whole project is divided into three phases, and the first phase is expected to be put into operation in 2021. In the future, Jingmen API base will link up with Tianjin Hankang CRO business, providing pharmaceutical companies and new drug R & D companies with R & D and production integration services from preclinical to commercial. Provide customized R & D services for its commissioned preparations and APIs (including pharmaceutical intermediates) according to different stages of drug development, such as process research and development, quality research, safety research, etc., as well as preclinical, clinical and commercial production services of different stages and different scales.
At present, the company has successively set up a project to develop small molecular chemical generic drugs / APIs such as pareoxib sodium for injection, esmeprazole sodium for injection, acyclovir API, etc., all of which are progressing smoothly, and the small-scale process research has been completed. Pilot-scale process verification will be carried out soon. Jingmen CMO business is expected to become a new business growth point of the company in the medium term.
The short-term epidemic situation does not change the company's transformation trend, and is positive about the company's follow-up development prospects. with the rapid development of Tianjin Hankang CRO business, Jingmen Raw material Drug Base and the third phase of Beijing Shadong CPT project, the company's multi-cooperative business transformation has achieved initial results, and positive and obvious changes have taken place in the company's fundamentals: 1. Jin Lujie faces the policy repression factor has bottomed out, the product does not have the growth but still can contribute certain cash flow; 2. The rapid development of Tianjin Hankang CRO business has gradually increased its contribution to the company's performance, which is expected to accelerate the overall performance of the company to stabilize and usher in a reversal; the 3.CPT project is progressing smoothly, with the subsequent commercial listing and other indications research, opening the valuation ceiling and long-term development space for the company. In the future, we continue to be optimistic about the company's business strategy transformation and development prospects.
Profit forecast and investment advice:
It is expected that in 2020, 2021 and 2022, the company will achieve homing net profit of 94 million, 115 million and 153 million respectively; the corresponding EPS will be 0.9,1.11,1.48 respectively; and the corresponding current share price PE will be 53 times, 43 times and 32 times respectively; the company will gradually get rid of the dependence on single product business, and at the same time, with business layout diversification and innovative drug listing, the company will usher in a new round of business development cycle. Continue to recommend and maintain the "overweight" rating.
Risk factors: the risk that the production and operation of Wuhan base is continuously affected by the epidemic, the follow-up review progress of innovative drug projects and the risk that commercial performance is not as expected.