\u3000\u3000 Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) (300233)
Event: Recently, the company launched an equity incentive plan. For the reduction of amortization expenses, the revenue target from 2022 to 2024 is not less than 3.8/43/4.8 billion yuan, and the net profit target is not less than 381/468/557 million yuan.
The market’s perception of Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) is relatively poor
The market believes that the company is only a medical chemical company with insufficient growth capacity. In 2011, the anti drug restriction order began, and the company stood out and achieved the leading position of cephalosporin intermediates; In 2017, the green chemical capacity of the supply side reform company improved the profitability of cephalosporin intermediates, and some varieties became single oligarchs; At the same time, the company moved forward to the downstream high-quality cephalosporin injection and became a winner in the centralized purchase in 2021. The company continued to expand its production capacity circle in the cephalosporin field. From cephalosporin intermediates to large-scale commercialization, cdmo and difficult raw material products will emerge one after another, including the company’s announced SM1 industrial chain and posaconazole. In 2022, the medical and chemical sector began to grow at a high speed.
The market has insufficient awareness of the company’s synthetic biology ability. In 2021, due to the deepening of the global epidemic, rising prices of raw materials, insufficient demand for medical terminals, supply chain and exchange rate, the profitability of the company’s cephalosporin business declined significantly. The stock price performance is still tenacious, which is largely due to the higher than expected growth of Jincheng biology. In the past decade, Jincheng biology has become a single oligopoly of glutathione from a follower of the global glutathione industry. This year, the adenosylmethionine API with higher barriers was approved, and astaxanthin and other products were gradually put into the market. The company’s synthetic biological products have formed a strong combination in the fields of drugs, human health care and animal protection, and can grow at a high speed.
The market is too pessimistic to interpret the nicotine industry. Even after the introduction of the new tobacco policy, China’s e-cigarette is highly regulated, which will at least not affect the export of nicotine to earn foreign exchange, and only reduce China’s market space by 10-15% at most. After PMTA certification in the United States, synthetic nicotine is not regulated, and the market share of synthetic nicotine has rapidly increased from 5% to about 15% in a quarter. It is estimated that the global demand for nicotine will be more than 900 tons in 2021, and the long-term demand for new tobacco will reach more than 5000 tons. According to the price center of 3.5 million yuan / ton, excluding medical demand, the market capacity of e-cigarette alone will reach 17.5 billion yuan. The company’s patented technology of directional enzyme catalyzed nicotine synthesis solves the problems of high cost and impurities of racemate removal in traditional synthesis methods. This technology is the product of the combination of synthetic biology and medical chemical industry. The nicotine business of the company is expected to become the third global leading business after cephalosporin intermediate and glutathione.
Profit forecast and investment rating
The equity incentive was finally implemented and the factors that suppressed the stock price were removed. In 2022, the company’s medical chemical sector reversed, and cdmo and nicotine businesses were more likely than expected. According to the equity incentive guidelines temporarily, the net profit of the company from 2021 to 2023 is predicted to be 160 / 457 / 565 million yuan respectively, and the corresponding PE is 85 / 30 / 24 times respectively, maintaining the “buy” investment rating.
Risk warning: uncertainty of epidemic development process, uncertainty risk of new tobacco policy, etc
