\u3000\u3000 Zhejiang Ausun Pharmaceutical Co.Ltd(603229) (603229)
This report attempts to interpret Zhejiang Ausun Pharmaceutical Co.Ltd(603229) from three perspectives: 1) what are the outstanding characteristics of the company? 2) Why does the company enjoy a relatively higher valuation? 3) What is the source of the company’s sustained and rapid growth?
Outstanding features of the company: technology-based entrepreneurs at the helm, “big R & D” system support. Zhejiang Ausun Pharmaceutical Co.Ltd(603229) was founded in 2010. Founder Zheng Zhiguo has been deeply engaged in medical industry R & D for many years, and then set up a company. In more than 10 years, the company has grown rapidly and has entered the leading echelon of China Meheco Group Co.Ltd(600056) manufacturing. The company’s products cover liver diseases (CS acid, bicyclol, entecavir, etc.), antibiotics (posaconazole, sisatacin, etc.), cardio cerebrovascular diseases (nabilol, miglitol, tigritol, apixaban, etc.), respiratory system, gout (non bustat, etc.), high-end fluorine products, prostaglandins and anti-tumor products. They are mainly exported to Europe, the United States, Japan South Korea and other countries and regions. With the concept of “large-scale research and development to achieve unconventional and rapid development”, the company has vigorously invested in scientific and technological innovation and formed a rich product gradient combination to drive the rapid development of the company.
Relative valuation premium: high R & D investment, high performance growth, and continuous improvement of the ceiling due to rapid business expansion. The company’s cdmo develops rapidly, accounting for more than half of its revenue in 2021h1. With the gradual release of API and intermediate production capacity, its performance is expected to maintain rapid growth. In addition, the extension to the preparation is expected to bring new long-term growth points. Among them, the ischemic stroke treatment drug BZP has great bomb potential and is expected to be listed in 2025.
Growth comes from: the rapid transformation and development of cdmo, the continuous relay of API and intermediate varieties, and the high-profile preparation strategy bring new long-term growth points.
Cdmo: the combination of multinational pharmaceutical enterprises and large and small customers of biotech, and the project undertaking capacity continues to improve. The company has a good international cGMP system, has been recognized by a number of customers in the European and American cdmo market, has gained a certain popularity, and has become a strategic supplier of many large international pharmaceutical enterprises. The company continues to accumulate talents and technology, and the undertaking capacity of cdmo projects continues to improve. There are 19 cdmo / CMO projects in progress in 2021h1, involving all clinical stages, from starting materials to API. In addition, a number of cdmo / CMO projects will be raised and invested in 2020, further enriching the project reserve.
API and intermediates: the gradient configuration is reasonable, and the continuous and rapid growth is driven by new production capacity and new varieties. The mature products of the company, such as dicyclohol, entecavir, cisartacin, posaconazole, febufenestat, nabilol and migglitol, will provide a stable source of income and profit in the next few years; At the same time, the company reserves rich API or intermediate projects in many fields such as cardiovascular, rheumatism and pain relief, prostaglandins, anti-tumor, respiratory system and high-end fluorine products. The corresponding production capacity is expected to be gradually released in the next year, which is expected to bring sustained growth momentum.
Extending to preparations: the international cooperation of generic drugs has been smoothly promoted, and the innovative drug BZP has great bomb potential. Generic drugs: cooperate with STADA to speed up the internationalization process of preparations. In addition to the dicyclic alcohol and entecavir preparations that have been declared in China, it also cooperates with the international major pharmaceutical enterprise STADA to develop and market chemical generic pharmaceutical products; Innovative drug: brozopine sodium has heavy bomb potential and is expected to be on the market in 2025. The company has submitted the application documents for the API and preparation of class 1.1 new drug brozopine sodium in China. At present, the phase II clinical progress is smooth. Compared with butylphthalide (NBP), BZP has better effect and no adverse reactions of NBP. With reference to NBP sales (RMB 6.6 billion in 2020), BZP is expected to become a blockbuster drug after listing. In addition, the company invested in Yingpai pharmaceutical industry to further expand the layout of the pharmaceutical industry.
Profit forecast and investment suggestions: we expect the company’s revenue from 2021 to 2023 to be 548, 781 and 1058 million yuan, with a year-on-year increase of 33.9%, 42.6% and 35.5%; The net profit attributable to the parent company was 135 million yuan, 203 million yuan and 293 million yuan, with a year-on-year increase of 55.4%, 50.7% and 43.9%; The corresponding EPS is 0.47, 0.71 and 1.02 yuan. The average valuation of comparable companies is 60% in 2021 × At present, the company’s share price corresponds to 84 / 56 / 39 times PE in 2021 / 2022 / 2023. Considering the rapid development of the company’s cdmo and the catalytic release of API and intermediate business with varieties and production capacity, it is expected to continue to increase in large quantities. The business layout of generic drugs and innovative drugs will create new long-term growth points, cover them for the first time and give a “buy” rating.
Risk tips: product R & D and technological innovation risks; International trade environment change risk; Environmental protection and safety production risks; Exchange rate fluctuation risk; There is a risk that the public information is delayed or not updated in time.
