\u3000\u3000 Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) (300702)
Key investment points
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be 200-280 million yuan in 2021, a year-on-year decrease of 58.02% - 70.02%, deducting 156-236 million yuan of non net profit, a year-on-year decrease of 60.15% - 73.66%.
Short term performance is under pressure. It is worth looking forward to the improvement of profitability and accelerated volume of cdmo in 2022. The company expects that the net profit attributable to the parent company in 2021 will be 200-280 million yuan, with a median of 240 million yuan, a year-on-year decrease of 64.02%; Among them, the deduction of non net profit was 156-236 million yuan, with a median of 196 million yuan, a year-on-year decrease of 66.90%. In a single quarter, Q4 realized a net profit attributable to the parent company of (- 604) - 73.96 million yuan (- 106.78% to - 17.03%), with a median of 33.96 million yuan (- 61.90%). We expect the company's revenue to maintain a stable growth in 2021. The short-term pressure on performance mainly comes from the pressure on gross profit margin, the growth of management expenses and the increase of R & D expenditure. It is expected to improve gradually from 2022. Revenue side: we expect that the sales volume of sartan API (valsartan, irbesartan, losartan potassium, olmesartan axetil and candesartan axetil) will maintain an increase of about 10% - 20%, and the overall product price will decline. In 2022, the sales volume of Satan API is expected to continue to maintain rapid growth, and the volume of cdmo, new API products and capacity release are worth looking forward to. Profit side: the gross profit margin is under pressure due to several factors, that is, the RMB exchange rate in 2021 appreciated by about 7.59% compared with the same period last year; The non-standard market price of sartan API fluctuated, and the selling price decreased compared with the same period last year; The production capacity of Shandong Changyi phase I project and Jingsheng pharmaceutical, the subsidiaries, is in a climbing period, and the production cost is phased high; The price of upstream raw materials increased. Expense side: the increase of management expenses over the same period last year is mainly due to the temporary factors such as equity incentive, employee salary subsidy during the epidemic, and the increase of quality management costs. R & D expenditure increased compared with the same period last year, mainly due to the continuous investment in preparations and API new products. We expect that the price of sartan API has been transmitted to the downstream due to the rise in the price of upstream raw materials. With the gradual release of production capacity in Changyi and Jingsheng production bases, the accelerated volume of API new products and cdmo business, and the elimination of temporary influencing factors, the company's performance is expected to gradually improve in 2022.
China is a highly competitive independent API supplier, and the upgrading of cdmo and preparations is accelerated. 1) Tianyu is one of the largest suppliers of sartan API in the world, with complete varieties and strong large-scale production capacity. 2) The company is a highly competitive independent API supplier in China and has the driving force for sustainable growth. API has been precipitated for more than 20 years, a high standard platform has been built, and the brand effect has been gradually strengthened. There are many reserves of new varieties, covering all kinds of chronic cardiovascular and cerebrovascular diseases. The follow-up volume is worth looking forward to. 3) The upgrading of APIs to cdmo and preparations is accelerating. Dcmo business has entered a growth period, and a number of projects have started to increase in volume, accounting for more than 20% of the revenue. At present, 11 products have been commercialized, and 13 products are to be commercialized, which can be expected. The investment in preparation R & D continues to increase. One product has been approved and many products are in the process of listing application. We expect that the company is expected to maintain a rhythm of about 8-10 applications for approval every year.
Profit forecast and Valuation: according to the forecast of the annual report, we fine tune the profit forecast data. It is estimated that the operating revenue from 2021 to 2023 will be RMB 2.680, 3.330 and 3.869 billion, with a year-on-year increase of 3.58%, 24.27% and 16.18%; The net profit attributable to the parent company was 251, 578 and 755 million yuan (351, 581 and 757 million yuan before adjustment), with a year-on-year increase of - 62.41%, 130.68% and 30.53%. The current share price corresponds to 65 / 28 / 22 times PE in 2021 / 2022 / 2023. In 2021, due to the influence of primary factors such as R & D investment, equity incentive expenses, short-term price fluctuation and exchange rate, the company's performance is under pressure in the short term, but the API new products, cdmo and preparation business laid out in the early stage are expected to reap harvest one after another. The new business can take off in the future and maintain the "buy" rating.
Risk warning events: environmental protection risk, quality risk, risk of price fluctuation of API and intermediate, risk of order loss caused by failure of new drug research and development, risk of delayed or delayed update of public data and information.
