Jianmin Pharmaceutical Group Co.Ltd(600976) (600976)
The competitiveness of China's time-honored brands is prominent, and lean production contributes to performance growth
Jianmin Pharmaceutical Group Co.Ltd(600976) with a history of one hundred years, the traditional Chinese medicine industry chain has profound heritage. Relying on the three brands of "Jianmin", "Longmu" and "Ye Kaitai", it has deeply cultivated the field of children's medication and children's general health, forming a large health industry group with pediatric product line, gynecological product line and characteristic traditional Chinese medicine product line as the core, It has established a good reputation and user base in the industry. The company continues to promote lean production, Completed the "golden batch" of four products (Longmu Zhuanggu Granule, Jianpi Shengxue granule, Jianpi Shengxue tablet and musk Zhuanggu ointment), improved product quality, reduced production costs and helped the continuous growth of performance. In the first three quarters of 2021, the company achieved an operating revenue of RMB 2.606 billion, a year-on-year increase of 62.23%, and a net profit attributable to the parent of RMB 257 million, a year-on-year increase of 104.36%.
Core products are newly upgraded, and brand marketing opens up downstream channels
In 2020, the company adheres to the concept of daring to innovate. At the same time, based on its own product strength, the company will rejuvenate and upgrade the gold single product Longmu Zhuanggu Granule, increase the price and increase the profit level. Longmu Zhuanggu Granule is a combination of Chinese and Western medicine with comprehensive functions. It has the effects of strengthening the spleen and stomach while supplementing calcium. After the price increase, the daily average cost is still relatively reasonable and has strong competitiveness. The company made a combination of brand marketing, built a multi-channel brand communication matrix, and reconstructed the brand and channel of products. A new generation of Longmu gold single pints emerged. In 2021h1, the sales volume of Longmu Zhuanggu granules exceeded 200 million bags, with a significant year-on-year increase of 90.29%. With the help of brand marketing, the company opens up downstream channels, and its product echelon is expected to contribute new performance growth.
Equity participation in the cultivation of exclusive bezoar suppliers in vitro is expected to benefit in the long term
Wuhan Jianmin Dapeng, a joint-stock subsidiary of the company, has the exclusive intellectual property right of in vitro cultivation of bezoar for class 1 new drugs of national traditional Chinese medicine. It is the largest industrialization base of in vitro cultivation of bezoar in China. Natural bezoar resources are scarce, and the price continues to soar. Cultured bezoar in vitro is comparable to natural bezoar in terms of composition, content and clinical efficacy, with stable quality and mass production, and the price is only one third of that of natural bezoar. In 2020, the annual output of in vitro cultured bezoar of Jianmin Dapeng will reach 5 tons. The State Food and drug administration stipulates that in vitro cultured bezoar can replace natural bezoar as medicine, but artificial bezoar shall not be used. In vitro cultured bezoar can replace natural bezoar. There is a broad market space. The company holds 33.54% equity of Jianmin Dapeng. In 2020, Jianmin Dapeng achieved a net profit of 290 million yuan and contributed 95 million yuan of investment income to the company, accounting for 64.27% of the net profit attributable to the parent. Jianmin Dapeng is expected to benefit from the scarcity of bezoar resources for a long time and continue to contribute to performance growth.
Profit forecast and valuation
As a century old traditional Chinese medicine enterprise, the company dares to innovate and change, and is expected to seize the opportunity of product upgrading and drive the continuous growth of performance. We predict that the company's operating revenue from 2021 to 2023 will be RMB 3.228 billion, RMB 3.956 billion and RMB 4.579 billion respectively, and the net profit attributable to the shareholders of the listed company will be RMB 328 million, RMB 424 million and RMB 520 million respectively. Referring to the 42 times PE given by comparable companies in 2021, Jianmin Pharmaceutical Group Co.Ltd(600976) is reasonably valued at 13.794 billion yuan, corresponding to the target price of 89.92 yuan. It is covered for the first time and given a "buy" rating.
Risk tips: price fluctuation risk of raw and auxiliary materials, product concentration risk, risk of increased operating costs, and R & D risk
