The company's 2022H1 performance was in line with expectations. The NBIP market continues to sink, and revenue from neurological products is growing steadily. Anti-tumor products account for 33% of finished drug revenue, and the market share of key products is gradually increasing. Countries collected bids for various anti-infective products to expand market share, and Ming Fu Le will submit marketing applications for new indications in the short term. The production and sales volume of vitamin C products increased simultaneously, and revenue from functional foods and other businesses grew rapidly. 2022H1, the company's R&D investment continues to increase, and more than 50 innovative products are in the clinical research stage.
The company's 2022H1 performance was in line with expectations. The company's 202H1 achieved revenue, basic profit attributable to shareholders (excluding changes in the fair value of financial assets and share-based remuneration expenses), and profit attributable to shareholders were 15.61 billion yuan, 3,069 billion yuan, and 2,966 billion yuan, respectively, compared with +12.9%, +14.9%, and -3.1% year-on-year. Revenue growth was mainly driven by pharmaceuticals, raw materials, functional foods and other businesses. The three businesses were +9.4%, +22.7%, +43.5%. Among them, revenue in 2022Q2, basic profit attributable to shareholders, and profit attributable to shareholders were 7.736 billion yuan, 1,532 billion yuan, and 1,562 billion yuan respectively, compared to +19.68%, +19.81%, and -1.85% year-on-year. Overall performance was in line with expectations.
The NBIP market continues to sink, and revenue from neurological products is growing steadily. In 2022H1, the company's pharmaceutical business achieved revenue of 12.293 billion yuan, +9.4% year-on-year, of which sales of neurological disease products were 3.874 billion yuan, +7.3% year-on-year, accounting for 32% of the revenue of the pharmaceutical business. Since the core product Enbipu began implementing health insurance prices in March 2021, the company has continued to push the county-level and township markets to sink, strengthen the promotion of outpatient prescriptions and develop the OTC market, and maintain steady growth in product sales.
Anti-tumor products account for 33% of the revenue of finished drugs, and the market share of key products is gradually increasing. The company's 2022 H1 anti-tumor product sales volume was 4,055 billion yuan, +2.3% year-on-year. It is still the segment with the highest revenue share in the pharmaceutical business (33%, 35% in the same period last year). Jinyouli continues to expand clinical use of products for more indications, and expand coverage of local and municipal core hospitals and county-level markets. In March 2022, it completed the collection of 11 provincial alliances led by Guangdong Province. Increased accessibility is conducive to wider clinical use. In June 2022, Kaili completed the procurement renewal of the 13 provincial alliances led by Henan. The price reduction was significant. We expect its sales revenue to experience some downward pressure. Domex currently has a market share of over 75% for similar products. As the world's first marketed mitoxantrone nanomedicine, since it was marketed domestically in February, Doenda has successfully developed more than 200 hospital customers and quickly gained market recognition.
Market share expanded after winning bids for various anti-infective products, and Ming Fu Le will submit a marketing application for the new indications in the short term. The company's 2022 H1 anti-infective product sales volume was 1,753 million yuan, +23.9% year-on-year. The amphotericin B cholesterol sulfate complex was included in the national health insurance catalogue in 2022, and has now covered more than 420 hospitals; in addition, several anti-infective products have been selected from national collection, including injectable ceftriaxone sodium, injectable cefazolin sodium, etc., expanding the hospital market share of the product. Sales of cardiovascular disease products amounted to 1,519 billion yuan, +4.8% year-on-year. Hyunning was affected by price reductions for other drugs to treat high blood pressure, and market competition intensified. Ming Fu Le is currently mainly used to treat patients with myocardial infarction. Its phase III clinical study for the treatment of acute ischemic stroke has reached the main end of the study and will submit a marketing application in the short term. Ming Fu Le's sales volume rose rapidly in the first half of the year, and there is great potential for growth. The 2022 H1 revenue of respiratory system, digestive metabolism, and other pharmaceutical products was 2.53, 3.62 million yuan, and 477 million yuan, respectively, +33.1%, +46.0%, and +33.9% year-on-year.
The production and sales volume of vitamin C products increased simultaneously, and revenue from functional foods and other businesses grew rapidly. The company's 2022 H1 API business revenue was 2,352 million yuan, +22.7% year-on-year. Among them, production and sales of vitamin C products increased simultaneously despite a decline in product prices, and further increased market share. Revenue reached 1,399 billion yuan, +29.4% year-on-year; revenue from antibiotics and other products was 953 million yuan, +14.1% year-on-year, mainly driven by increased sales volume of individual antibiotic products. The company's functional food and other business revenue was 965 million yuan, +43.5% year-on-year, mainly driven by the increase in sales volume and price of caffeine products.
R&D investment continues to increase, and more than 50 innovative products are in the clinical research stage. The company's R&D expenses in 2022H1 reached 1,884 million yuan, +16.8% year-on-year, accounting for about 15.3% of the revenue of the pharmaceutical sector. Currently, there are about 300 research projects under development, including more than 40 small-molecule innovative drugs, more than 40 macromolecule innovative drugs, and more than 30 novel formulations. The main focus is on anti-tumor, immunity and respiratory, neuropsychiatric, cardiovascular, metabolic and anti-infective fields.
The company submitted marketing applications for 4 drugs in 202H1, namely recombinant whole-human anti-RANKL monoclonal antibody injection JMT103, irinotecan liposome injection, norvenlafaxine succinate extended-release tablets, and rizetinib mesylate capsules. Among them, JMT103 submitted a marketing application in June 2022 and was included in priority review, making it the world's first IgG4 subtype all-human anti-RANKL neutral monoclonal antibody to submit an NDA application. The company has more than 50 innovative drugs in the clinical research stage. Since the beginning of 2022, it has been developing innovative drugs and has obtained IND approvals for 7 initial indications and 3 new indications. The COVID-19 mRNA vaccine independently developed by the company has carried out 6 clinical studies, and the phased positive results have been announced through an announcement. Overseas, in July 2022, injectable docetaxel (albumin-conjugated) for treating gastric cancer (including esophagogastric junction cancer) received orphan drug certification from the US FDA.
Risk factors: The company's R&D progress is lower than expected; drug bidding prices have been reduced; market competition has intensified.
Investment suggestions: During the reporting period, the company's various businesses maintained strong growth, and major innovative drug types will be listed one after another. Combined with the 2022-2021 performance, it maintains the 2022-2024 EPS forecast of 0.53/0.61/0.69 yuan. Referring to the valuation of comparable companies (according to Wind's unanimous forecast, in 2022, the comparable company Xiansheng Pharmaceutical's PE is 16 times, Hanson Pharmaceutical PE is 28 times, China's biopharmaceutical PE is 14 times, the average value is 19 times). Considering the company's strong profitability, the company was given 18xPE in 2022, corresponding to a target price of 11 HK$11 (approximately RMB 9.5, exchange rate 0.85) to maintain the “buy” rating.