\u3000\u3000 Zhejiang Starry Pharmaceutical Co.Ltd(603520) (603520)
Key investment points
Zhejiang Starry Pharmaceutical Co.Ltd(603520) in 2022: the leader of contrast agent API starts again
① contrast agent API leader: from the perspective of business composition, the company's contrast agent API business revenue accounted for about 89% in 2020. The company is the leader of contrast agent API with the largest production capacity and the most complete product registration in China. ② Starting again: in 2020, the company won the bid for two injections for the first time in the centralized conversion of IPO raised investment projects and volume procurement in 2021. We are concerned that in 2022, the company is in the window period of centralized release of API production capacity and rapid increase in the proportion of preparation business revenue. The expansion of international API and deepening industrial chain cooperation are expected to improve the growth ceiling.
Industry: application expansion, generic drug penetration, maintaining steady growth
Chinese market growth Dividend: the core comes from the promotion of generic drugs, and the long-term drive comes from the improvement of the penetration of contrast imaging applications. According to the data of wind sample hospitals, the sales volume of main iodine contrast agent injection sample hospitals in 2020 was 4.28 billion yuan, and the enlarged market scale was about 10-13 billion yuan; 2013-2020 sales CAGR is 13.5%. In terms of the number of medical imaging diagnostic equipment, the penetration rate of contrast imaging application, and the standardization of diagnosis and treatment behavior of hospitals at different levels, we expect that the per capita amount of contrast agent in China still has more than three times the room for improvement. Global market: the sales volume of preparations is 4-4.5 billion US dollars, and the marginal change of supply and demand in the industrial chain brings API reconstruction opportunities. In terms of variety structure, the global sales of iohexol preparations accounted for about 33% in 2020, and the second largest variety was ioxamol (global sales accounted for 18%); In terms of regional distribution, the United States, Europe and China each account for about 1 / 3. We believe that the high proportion of original research of contrast agent injection in the world mainly comes from the advantages of original research (cost, process, sales channel, etc.) and the compliance and stable supply of API. The marginal change in 2022 comes from the improvement of breakeven point under the background of limited original research capacity and rising cost, which brings opportunities for API suppliers to expand.
Company: release production capacity, win the bid for centralized procurement, and contribute to performance growth
API: the production capacity of core varieties will release 2500 + tons and accelerate the expansion of globalization. ① Industry demand: Based on the analysis of wind sample hospital and Newport data, the total global demand for raw materials of iodine contrast agent in 2020 is 9500-10000 tons, including about 2000-2500 tons in China. ② Production capacity: from 2020 to 2021, the "X-ray contrast agent project" project will be converted to fixed assets one after another. Considering the trial operation, factory GMP certification and product registration change, and the climbing time of production capacity utilization, we expect the total production capacity of iodine contrast agent API of the company to reach 2500-3000 tons in 2022, which is expected to increase by more than 75% compared with 2020. ③ According to the rhythm of 2023, the proportion of self owned preparations in the total production capacity of the company is expected to increase from about 10% in 2023 to about 10% in 2023. (2) International expansion is accelerated. We believe that under the background of centralized procurement of iohexol injection and ioxamol injection in China, the proportion of procurement among the company's Chinese customers may change, and the Chinese market demand and overseas market expansion of overseas customers may support higher growth. Under such estimation, we expect that the capacity utilization rate of the company's main API varieties will increase to 70% + from 2022 to 2023. At this time, the sales market share of the company's three API varieties in China may be 40-60%, the market share of global total demand may be 15-20%, and the company's revenue CAGR of iodine contrast agent API from 2021 to 2023 will be 25-30%.
Forward integration: new increment of winning the bid for centralized purchase. The bid winning sales volume of two varieties of the company (iohexol injection and ioxamol injection) in the fifth batch of centralized procurement is about 190 million yuan. Assuming that the sales volume space is expanded by one time in the centralized procurement, the contribution of the corresponding preparation incremental revenue is 350-400 million yuan; We estimate that the average net profit margin of the bid winning preparations of the fifth batch of centralized procurement is 13-17%, and the corresponding incremental profit contribution of preparations is about 50-70 million yuan.
Profit forecast and valuation
We expect that the company's EPS from 2021 to 2023 will be 1.37, 2.1 and 2.8 yuan / share respectively, and the closing price on February 12, 2022 corresponds to 24 times PE in 2022. We believe that the company is the leader of contrast agent API in China. During the acceleration period of forward integration under the centralized release of API production capacity and the winning of centralized procurement, there is room for medium and short-term performance to exceed expectations; In the context of international customer expansion and deepening industrial chain cooperation, with the upgrading of the company's supply capacity, we believe that the growth ceiling is expected to be improved, covered for the first time, and rated as "overweight".
Catalyst
In centralized procurement, the scalar or winning price is better than expected, new progress in strategic cooperation with core customers, etc.
Risk tips
Risk of production safety accidents, risk of sharp price reduction or standard deviation of centralized purchase of preparations, risk of sharp fluctuation of upstream costs, and risk of order delivery volatility.
