\u3000\u3000 Zhejiang Xianju Pharmaceutical Co.Ltd(002332) (002332)
Zhejiang Xianju Pharmaceutical Co.Ltd(002332) : from toughness to elasticity
Among the steroid hormone companies listed on A-share market, Zhejiang Xianju Pharmaceutical Co.Ltd(002332) is one of the companies that promote the fastest forward integration and standardize the most categories of APIs and intermediates in the market. Benefiting from the integrity of the company's layout in the steroid industry chain and the richness of APIs and preparations, the company has returned to its parent for 27 quarters, with a continuous positive growth in net profit and a continuous improvement in net profit margin. We believe that the current valuation of the company reflects that ① steroid hormone track has a large space outside China, but it is difficult to track and predict the sustainability and certainty of growth; ② Under the background of centralized purchase of specialty generic drugs, the logic of large-scale production has certain uncertainty; In the longer term, under the longer R & D and registration cycle of high barrier preparations (such as inhalation preparations), there is also a long time difference in product commercialization and performance realization. Under the upgrading trend of steroid industry chain, based on the investment return of manufacturing industry and the evaluation of drug application and registration, we are optimistic about the resilience of long-term and stable growth of the company's performance, and the pace of product upgrading of the company may accelerate from 2023 to 2024.
Preparations: accelerated registration and structural upgrading
Centralized mining varieties: the influence of centralized mining on the profit side is controllable. Under the most pessimistic scenario, we expect that it may bring fluctuations in the growth rate of 5-10% net profit in 2022; Under the neutral scenario, we expect to affect the growth rate of 4-6% net profit in 2022. Through comprehensive analysis, we expect that the revenue growth rate of the company's "anesthesia and muscle relaxant" preparations may decline in 2022, the net profit margin will increase significantly, and the impact on the net profit will be limited.
Incremental varieties: accelerated registration, clinical promotion, market development and structural upgrading. We estimate that the market capacity of Yangfu preparation plant after centralized purchase and price reduction of varieties is 6-8 billion yuan, and the EIA target annual sales of "high-end preparation internationalization construction project" is 800-900 million yuan (see below for details); On January 18, 2022, it was announced to invest 120 million yuan to build a production line with an annual output of 20 million injections and 200 million capsules, with a target annual sales of 250 million yuan. We propose to analyze the growth space of the company's preparations from the dimensions of preparation capacity layout, product registration and channel construction. We estimate that the CAGR of preparation revenue is expected to reach 15-20% from 2021 to 2023.
In terms of high-end product varieties, Progesterone Sustained-release vaginal gel's R & D progress has entered the BE state in December 2021. Omexone sodium for injection, the only targeted muscle relaxant antagonist in China and the only one in the world (Note: the production of the drug's API and preparation is exclusively produced by Zhejiang Xianju Pharmaceutical Co.Ltd(002332) , and the company is also responsible for the sales in most parts of China), has completed the third phase of clinical enrollment in China. We expect that the company's variety upgrading in the fields of high barrier preparations and steroidal APIs is expected to accelerate from 2023 to 2024.
API: production capacity launch and product registration
Understand the resilience and elasticity of the company's API business revenue growth from the essence of manufacturing upgrading: product upgrading + compliance capacity release is the core logic, and the marginal change is the promotion of GMP certification and FDA inspection in Yangfu factory. In the medium and short term, the investment in Yangfu API factory area is 800-900 million yuan. We assume that most of the investment is fixed assets, the turnover rate of fixed assets is 2.5-3.5, and the corresponding output value of the plant is 2-3 billion yuan; The growth of the company's API and intermediate business from 2020 to 2021 depends more on Taizhou Xianju plant (we expect the revenue to be 1.5-2 billion yuan in 2021). The capacity release and certification of Yangfu plant are expected to accelerate the upgrading of API products. In the medium and long term, with the synergy of newchem industrial chain + the upgrading of high-end steroids and the upgrading of supply capacity (based on the company's advantages and foundation in fermentation and synthesis technology), there is room to improve the turnover rate of fixed assets and open the ceiling of long-term growth.
Profit forecast and valuation
In the medium and long term, we are optimistic about the trend of upgrading the steroidal industry chain and the sustainability of performance growth under the production capacity investment and audit of Yangfu API. The technical process and production quality control capacity accumulated by the company in the field of steroidal API and intermediates lay the foundation for the upgrading of supply capacity; In the medium and short term, with the main varieties participating in the volume procurement, the profitability of the preparation is improved and the respiratory market continues to expand, the sustainability of profit growth may exceed expectations. In the profit forecast, we have considered the impact of centralized purchase of preparation varieties from 2022 to 2023, and do not consider the sales of new preparations for the time being. We expect EPS to be 0.61, 0.75 and 0.96 yuan / share respectively from 2021 to 2023. The closing price on February 10, 2022 corresponds to 19 times PE in 2021 and 15 times PE in 2022, which has a high valuation cost performance and maintains the "overweight" rating.
Risk tips
The risk of centralized purchase and price reduction of core preparation products, the risk of fluctuation of production capacity input cycle, the risk that the high-end market expansion of API business is less than expected, and the risk of sharp fluctuation of raw material cost.
