2Q23 The inflection point is approaching, and the construction of a new product group is underway; maintaining “buying”
Changchun Hi-Tech achieved revenue of 2.78 billion yuan (-6.6% yoy) in 1Q23. The decline was mainly due to growth hormone sales being affected by the epidemic and 1Q22 high base stock preparation, which was dragged down by real estate business; the net profit of Guimo was 860 million yuan (-24.7% yoy), and the main reason for the greater decline in profit was: 1) At the gross margin level, price in exchange for volume and long-term efficiency ratio in the Pink Needle Alliance region drove growth hormone product restructuring; 2) R&D expenses increased with investment in new products (+43% yoy). Looking ahead to 2023, we are optimistic that new patients will recover after Growth Hormone 2Q, and that 100 grams will gain an additional dose of shingles. We expect the company's EPS for 2023-2025 to be 12.29/14.68/17.38 yuan, and give the company 19 times PE in 23 years (due to the potential risk of growth hormone collection, which is discounted 33 times more than comparable company Wind in '23), with a target price of 233.51 yuan, maintaining the “buy” rating.
Jinsai: New patients gradually recovered from 2Q, and the gynaecological/pediatric/cancer/medical and aesthetic product group formed a second curve. Golden Race 1Q23 earned 2.35 billion yuan (-11.2% yoy), and the net profit of the mother was 895 million yuan (-25.7% yoy). The main reason for the decline in revenue profit was: 1) January medical treatment volume was still affected; and 2) 1Q22 emergency preparation pushed up the base (for example, excluding excess shipments that affected 1Q23's revenue growth rate by 10%). We are optimistic that the revenue growth rate of Jinsai in '23 will be impacted by 20%. The main factors are: 1) the recovery of new patient enrollment in the 2Q group (the growth rate of new patients has exceeded 40% since April), and that the growth rate of new patients will remain high during the year; 2) the number of powder needles won bids, complete water needle specifications+expansion of indications (1Q23 accounts for 60% of growth hormone revenue); 3) long-term benefits of improved injection methods +PEG self-production. We expect strong sales/profits in 23, and the subsequent overseas layout (soon to be declared FDA phase III clinical trial) and second-generation products. city. In addition, the company is deployed in gynecology, pediatrics (weight loss/breathing), cancer (stomach cancer, prostate cancer, etc.), and medical aesthetics. This year's products may land one after another, and next year they may contribute considerable sales.
100 grams: Acne vaccine has recovered steadily. We are optimistic that the upper 100 grams of the herpes zoster vaccine will benefit from the low base figure and acne vaccine recovery during the year. 1Q23 achieved sales revenue of 180 million yuan (+30.2% yoy), and net profit of 18 million yuan (+6.5% yoy). We are optimistic that the company's revenue side will show a considerable rebound: 1) batch issuance of acne vaccines and nasal spray vaccines will return to normal; 2) the new herpes zoster vaccine will be approved at the end of January, and we are optimistic that wholesale distribution of new products of the herpes zoster vaccine will be distributed one after another (currently the tender price in Fujian is 1,368 yuan/pack in the first year). Sales are impressive. In addition, other new products are expected to be launched one after another: 1) We estimate that the nasal spray influenza vaccine (phase II is completed), etc. may be marketed in 23-24; 2) we estimate that it will go viral (phase I completed) or that it will be accepted for sale in '25.
Huakang focuses on innovation in traditional Chinese medicine, and the real estate business is subsequently divested
Huakang's 1Q23 revenue was 165 million yuan (-2.4% yoy), and the net profit of the mother's 9 million yuan was basically the same.
We expect that in '23, the company will explore the value of existing varieties and subsequent supplementary pipelines for innovative Chinese medicine research and development, and that revenue and profit may resume steady growth. Real estate achieved revenue of 71 million yuan and profit of 1 million in 1Q23. The obvious decline was mainly due to the decline in real estate during the year (but it already picked up in April). We expect subsequent revenue and profit to be stable, and we are optimistic that after the 2-3 Q23 divestment of this business is completed, Hi-Tech will focus entirely on the pharmaceutical business.
Risk warning: collection risk, vaccine sales falling short of expectations, risk of failure in new product development.