\u3000\u3000 Jianmin Pharmaceutical Group Co.Ltd(600976) (600976)
Recommendation logic: 1) the pediatric medication market is in short supply. In 2018, the market scale exceeded 78.6 billion yuan, and the company’s pediatric medication increased more than expected. In 2021h1, the sales revenue of Longmu Zhuanggu granules, the core single product, exceeded 200 million bags, doubling year-on-year growth; 2) Under equity incentive, the profit side of self-produced products will maintain a growth rate of at least 20% every year from 2021 to 2023. 3) In vitro cultivation of bezoar has strong barriers, which can effectively replace natural bezoar and artificial bezoar, and is expected to continue to contribute a large investment income to the company.
The market prospect of pediatric drugs is broad, and pediatric drugs are growing rapidly. In 2018, the scale of China’s children’s drug market reached 78.6 billion yuan, and there was insufficient supply of children’s drugs. The number of varieties of children’s special drugs in China accounted for less than 60% of the children’s drug market. The children’s drug market is expected to grow further and rapidly in the future. The company has a rich pediatric product line. In 2020, the company’s pediatric drug revenue exceeded 600 million yuan. In 2021h1, the pediatric revenue reached 480 million yuan, a year-on-year increase of 119%.
Longmu Zhuanggu Granule rebounds rapidly and has multiple advantages. In 2021h1, the sales volume of Longmu Zhuanggu Granule increased by 90% year-on-year. As the largest single product, Longmu Zhuanggu Granule has multiple advantages: 1) the brand advantage is prominent, ranking among the top ten calcium supplement brands, and becoming the first in the sales list of children’s proprietary Chinese medicine in pharmacies in 2020; 2) The product has a wide range of indications and can be used for calcium supplement for children and the elderly. While calcium supplement, it also has the effect of regulating the spleen and stomach and promoting digestion, so as to achieve the effect of indirect calcium supplement. 3) In 2019, the products will have new packaging and the product price will increase. With the upgrading of product packaging and taste, it is expected to achieve further growth.
Dapeng pharmaceutical’s exclusive patent barrier contributed a large investment income. There are more than 600 varieties of bezoar as raw materials in China. There is a gap between supply and demand of natural bezoar. The price of natural bezoar in China has exceeded 500 yuan / g. In vitro cultivation of bezoar has the advantages of low cost and the same efficacy as natural bezoar, which has become an effective substitute for natural bezoar. Dapeng pharmaceutical, a subsidiary of the company, purchased the exclusive technology of in vitro cultivation of bezoar in 1999. In 2020, Dapeng pharmaceutical achieved a revenue of 480 million yuan and a net profit of 290 million yuan. The imbalance between supply and demand in China’s bezoar market has intensified, and the in vitro cultivation of bezoar will further realize the substitution of natural bezoar and artificial bezoar in the future.
Profit forecast: it is estimated that the EPS from 2021 to 2023 will be 2.13 yuan, 2.84 yuan and 3.79 yuan respectively, and the net profit attributable to the parent company will maintain a compound growth rate of 58% in the next three years.
Risk tip: the sales growth of Longmu Zhuanggu Granule was lower than expected, and the sales growth of in vitro cultured bezoar was lower than expected.
