Henan Lingrui Pharmaceutical Co.Ltd(600285) (600285)
After the marketing reform, the company entered a new stage of development and maintained the “buy” rating
Henan Lingrui Pharmaceutical Co.Ltd(600285) is a leading enterprise in China. The first marketing reform has improved the layout and laid the foundation for rapid growth for the second reform. With the effectiveness of marketing integration, the steady growth of the core product Tongluo Qutong ointment, the upgrading of Zhuanggu musk analgesic ointment, the successful price increase of three general drugs and the rapid expansion of grass-roots medical varieties, the development of the company will enter a new stage, We raised the profit forecast for 2021-2023. It is estimated that the net profit attributable to the parent company in 2021-2023 will be 386 (formerly 3.77) / 4.55 (formerly 4.53) / 572 (formerly 554) million yuan respectively, and the EPS will be 0.68/0.80/1.01 yuan respectively. The corresponding PE of the current stock price is 19.0/16.1/12.8 times respectively, maintaining the “buy” rating.
The second marketing reform in 2019 will simplify the layout, improve quality and efficiency
In 2021, the company implemented stock incentive plan and employee stock ownership plan, and set up performance evaluation standards with annual growth rates of 20% / 20% / 15% respectively for deducting non net profit (excluding the impact of equity incentive expenses) from 2021 to 2023. The company increased investment and improved layout for the first marketing reform in 2012, with remarkable results. However, due to increased marketing investment, the sales expense rate basically kept pace with the gross profit margin, As a result, the second marketing reform was launched to simplify the layout, improve quality and efficiency. We expect the company’s marketing efficiency to continue to improve, and the sales expense rate is expected to decline steadily.
Tongluo Qutong ointment grew steadily, Zhuanggu musk Qutong ointment was upgraded, and the price increase of generic drugs is expected to be reflected quickly
The OTC channel of Tongluo Qutong ointment has been rapidly expanded, and it is combined with the sales of Huoxue Xiaotong tincture to help increase the volume. Under the same price, change the number of OTC end stickers to enhance profitability, and it is expected to maintain steady growth in the future. Zhuanggu musk analgesic ointment is replaced by high-quality products, and the selling price is increased from 0.3-0.5 yuan / paste to about 2-3 yuan / paste. The proportion of high-quality products is increasing steadily, which is expected to achieve rapid growth. The single paste prices of the old products Zhuanggu musk analgesic ointment, Shangshi analgesic ointment and joint analgesic ointment have increased, and basically did not bring channel inventory backlog. It is expected that the performance thickening caused by the price increase will be quickly reflected in the report end.
The primary medical end will increase marketing promotion and increase variety supply, which is expected to increase rapidly
After the marketing reform, the company increased the marketing promotion of grass-roots medical treatment. Many of its oral drug products are suitable for grass-roots promotion, and the company gradually resumed the production and re registration of some varieties and increased the supply of varieties. We believe that benefiting from this marketing integration, the sales volume of grass-roots medical products is expected to grow rapidly.
Risk warning: product sales are not as expected; Market competition intensifies.
