\u3000\u3000 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) (603456)
2021 is the key year for the company to improve the cdmo platform. Sufficient capacity reserve + preparation platform extension ensure long-term growth space. Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) since the transformation of cdmo in 2008, it has continued to attract talents and strengthen overseas cooperation, and has grown into today’s cutting-edge cdmo through in-depth binding with Novartis. In 2021, the company acquired excellent production capacity and preparation platform, improved industrial chain layout, strengthened its own strength, and prepared sufficient resources for subsequent development. At the same time, we also saw excellent achievements in cdmo customer expansion, and the income proportion of a number of excellent pharmaceutical enterprises outside China, such as Roche, first sanggong and Beida, increased rapidly, With the support of excellent customer resources + sufficient capacity reserves and raw materials to the whole industry chain platform of preparations, the company’s competitiveness and development space will be greatly improved in the future.
The potential of Novartis heavy products is still considerable, and long-term strategic cooperation will provide more increment. With the approval of the new indications of Novartis, its peak sales in the future are expected to exceed 10 billion US dollars. We expect the total sales of Novartis’s three heavy products (Novartis, rebossini and nilotinib) to exceed 10 billion US dollars in 2023 and contribute more than 2 billion yuan of revenue to Jiuzhou. According to the overall revenue of 742 million cdmo in 2019, the revenue increase is very obvious, We expect more profit growth. Novartis is expected to further promote the production of cdmo and other raw materials and services, and Novartis is expected to further improve the performance of Novartis in the future.
The diversification trend of customer structure is good, sufficient production capacity + improvement of industrial chain promote the long-term and rapid release of performance. Following the acquisition of Novartis Suzhou plant, the company successively acquired Teva Hangzhou plant and Nanjing kangchuanji pharmaceutical in the second half of 2021. With sufficient capacity, it will further open the ceiling of cdmo business and gradually establish an integrated platform from intermediates to APIs to preparations. In terms of customer structure, the cooperation relationship between the company and Roche and other large multinational pharmaceutical enterprises is also constantly strengthened, and the cooperation with China biotech is also in a leading position. In the future, the company’s cdmo business is expected to achieve sustained and rapid growth in a long cycle.
Investment suggestion: Novartis’ core drugs, such as nuoxintol, ribocinib and nilotinib, have a broad global market space, driving the company’s continuous high growth of API and intermediate income. In addition, by strengthening customer expansion and optimizing the revenue structure, the company’s performance has entered a stage of rapid and stable growth. It is estimated that the company’s revenue from 2021 to 2023 will be 3.936 billion yuan, 5.285 billion yuan and 6.971 billion yuan respectively, with a year-on-year increase of 48.7%, 34.3% and 31.9%; The net profit attributable to the parent company was 650 million yuan, 891 million yuan and 1.187 billion yuan respectively, with a year-on-year increase of 70.7%, 37.2% and 33.1%; The recommended share price of 2021-2023 is 38 times that of 2021-2023.
Risk tips
API price fluctuation risk; The product volume of Novartis is lower than the expected risk; The company’s new project promotion is less than the expected risk.
