Items:
The company announced its 2020 report that its income was 1.493 billion yuan, an increase of 10.26% over the same period last year; the net profit was 319 million yuan, an increase of 4.40% over the same period last year; and the net profit of non-return was 287 million yuan, down 3.05% from the same period last year. The company's annual report was lower than expected.
At the same time, the company released the first quarterly report of 2021, with an income of 395 million yuan, an increase of 7.60% over the same period last year, and a net profit of 74.31 million yuan, down 11.34% from the same period last year. 2021Q1 performance is basically in line with expectations.
The profit distribution plan for 2020 is 2 yuan (including tax) for every 10 shares.
Safety point of view:
Sales were high before and after low in 2020, mainly due to the epidemic prolonging the downstream inventory consumption cycle: the company achieved an income of 1.493 billion yuan (+ 10.26%) and a net profit of 319 million yuan (+ 4.40%) in 2020, which was lower than previously expected by the market. We believe that the main reason is that the epidemic affects the sales of downstream preparations, resulting in slow digestion of API inventory. In the 2020H1 sample, anti-infective drugs in hospitals declined by 32% as a whole. However, with the epidemic under control, the downstream inventory has been basically digested in the second half of 2020, the revenue end of 2020Q3 is the annual low, and Q4 revenue begins to rise. The company's gross profit margin for the whole year of 2020 is 40.44% (- 2.67pp), which is mainly affected by the price increase of raw materials. The average price of core raw materials 6-APA in 2020 is 192yuan / kg, an increase of 23% over the average price in 2019. 2021Q1's net profit was 74.31 million yuan (- 11.34%), mainly affected by the high base in the same period last year, basically in line with expectations. We believe that the company's performance in 2021 is expected to be low before and after high.
Sales of core varieties have maintained rapid growth, and capacity expansion has consolidated its leading position: in 2020, the company sold 4464 tons of APIs and intermediates (+ 33.63%), which is higher than the revenue growth rate, which we expect to be mainly due to the decline in product prices. At present, sulbactam is about 450yuan / kg (650700yuan / kg in the same period last year), while the price of tazobactam is about 7000 yuan / kg and 4-AA is 1700-1800 yuan / kg, which is stable as a whole. In terms of production capacity: in 2020, the 900-ton Batan intermediate project of Aotong Pharmaceutical Industry has been completed, and the trial production of antiviral intermediate products has been successful; the Jiangxi Xiangtazobactam project has been completed, and the first aseptic freeze-dried API production facility has been completed. start trial production; Jingdezhen Fuxiang Biopharmaceutical Project Phase I production workshop and supporting warehouse land capping, etc.
Cooperate with Lingkai Pharmaceutical to speed up the development of CDMO business: in 2020, the company and Lingkai Pharmaceutical jointly funded the establishment of Lingfu Pharmaceutical Research Institute, with a capital contribution of 49 million yuan, accounting for 49% of the total share capital. Lingkai Pharmaceutical is a fast-growing pharmaceutical R & D and production service outsourcing enterprise, and cooperation with it is conducive to the rapid development of CDMO business. At present, Ling Fu Pharmaceutical Research Institute has 7 products under development, including docabamide. In addition, the company has made more than half of its investment in the Tapax mixed powder project and is expected to be available by the end of 2022, helping the company successfully enter the field of aseptic API production.
Profit forecast and investment rating: considering the impact of the epidemic in 2021 and the company's performance is lower than expected, we adjust the 2021-2022 EPS forecast to 0.65 yuan and 0.75 yuan (the original forecast is 0.95 yuan and 1.08 yuan), and predict that the company's performance will be 0.89 yuan in 2023.
After the previous share price adjustment, the current stock price corresponds to 19 times of PE in 2021, which is in a reasonable valuation range and maintains the "recommended" rating.
Risk hint: 1) Market competition risk: at present, the company is actively carrying out production capacity expansion, which will face oversupply in the short term after reaching production, and there is a risk of product price decline caused by the deterioration of market competition; 2) R & D risk: at present, the company is actively engaged in new product research and development, and there is a risk of failure. 3) Safety and environmental protection risk: the company is located in the field of characteristic API is a high pollution industry, at the same time, there are many steps of product synthesis, there is a risk of safety and environmental protection events.