Jianmin Pharmaceutical Group Co.Ltd(600976) (600976)
A 400 year old brand, equity incentive shows confidence
The predecessor of Jianmin Pharmaceutical Group Co.Ltd(600976) is Ye Kaitai, founded in the 10th year of Chongzhen of the Ming Dynasty (1637). As a time-honored enterprise in China, the company has "Jianmin", "Longmu" and "Ye Kaitai" Three brands. Longmu Zhuanggu Granule, the leading product of the group, is a well-known brand in the field of children's healthy growth drugs. In the first three quarters of 2021, the revenue was 2.61 billion yuan, a year-on-year increase of 62.2%; The net profit attributable to the parent company was 260 million yuan, a year-on-year increase of 104.4%, which has exceeded the annual performance in 2020 in the first three quarters. In addition, in 2021, the company will conduct equity incentive to bind the interests of the core management. The unlocking condition is that the compound growth rate of the net profit attributable to the parent after excluding the investment income of Dapeng will not be less than 20% in the next three years.
Longmu bone strengthening is renewed, and new varieties are promoted and developed to open up growth space
The pediatric business of the pharmaceutical industry is the main revenue source of the company. With the brand upgrading of the company's exclusive protected variety Longmu Zhuanggu Granule, the pediatric revenue of the company in the first half of 2021 was 480 million yuan, a year-on-year increase of 119%. It is estimated that the market scale of nutritional supplements in which Longmu Zhuanggu Granule is located exceeds 13 billion yuan. Relying on its strong product and brand strength in the field of children's supplements, Longmu Zhuanggu Granule is expected to become a large single product of 1 billion level.
The overall R & D work of the company has been steadily promoted: including the professional review of the drug examination center after the application for production of Liwei capsule, a new class 1.1 traditional Chinese medicine; The phase III clinical research of Xiaoer Zhike syrup and Niuhuang Xiaoer antipyretic plaster is progressing smoothly.
The company has rich promotion channel resources. Through continuous advertising, Ka chain cooperation, blank market development and other measures, the company has maintained a steady increase in the scale and profit of leading products. The sales of two potential single products Jianpi Shengxue granule / tablet and biantong capsule have also gradually accelerated in recent years.
We believe that with the help of mature promotion channels, the promotion and R & D of new varieties are expected to bring new growth points to the company.
Jianmin Dapeng, a joint-stock company: cultivating bezoar in vitro can be called the "Diamond Star" of traditional Chinese medicine
The company participated in Jianmin Dapeng pharmaceutical in 2005, and the current shareholding ratio is 33.54%. The in vitro cultured bezoar owned by Jianmin Dapeng pharmaceutical is a class 1 new drug variety of national traditional Chinese medicine, and the in vitro cultured bezoar can replace the natural bezoar, so it perfectly fills the space of insufficient supply of natural bezoar. In addition, in vitro cultivation of bezoar is increasingly recognized by downstream customers because of its advantages of guaranteed production capacity and cheaper price.
From 2012 to 2020, Jianmin Dapeng's revenue and net profit increased rapidly, with an operating revenue of 480 million yuan in 2020 and an 8-year compound growth rate of 23%; In 2020, the net profit will be 290 million yuan, with an 8-year compound growth rate of 37%. In the future, we will continue to be optimistic about the high-speed growth of Jianmin Dapeng in vitro cultivation of bezoar with both volume and price rising.
Re recognition of the company's value, the only in vitro cultivation bezoar provider is extremely scarce
We believe that the market value of Jianmin Pharmaceutical Group Co.Ltd(600976) can not be viewed in a single way. It is divided into two parts, and the segment valuation is more reasonable. 1) Jianmin Dapeng: with 33.5% equity participation and stable equity ratio, and the price of Angong Niuhuang Pill continues to rise, the company, as the only in vitro cultivation Niuhuang provider, has strong resource attributes and irreplaceable. For the valuation of this part of equity value, please refer to the same scarce target Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) . 2) Main business: it belongs to OTC varieties of traditional Chinese medicine. The market space of single variety can be further expanded and the contribution to net profit is stable. Please refer to the valuation of OTC companies of traditional brands.
Investment suggestion: for the first time, give "buy" investment rating
We expect that the company's revenue from 2021 to 2023 will be RMB 3.27/39.7/4.58 billion respectively, with a year-on-year increase of 33.2% / 21.3% / 15.4% respectively, and the net profit attributable to the parent company will be RMB 3.3/4.3/540 million respectively, with a year-on-year increase of 124.3% / 30.4% / 24.2% respectively, corresponding to EPS of RMB 2.16/2.82/3.50 from 2021 to 2023, with a corresponding valuation of 36x / 28x / 23x. Considering the stable growth of the company's main business and the echelon of R & D products, the in vitro cultivation of Bezoar by Jianmin Dapeng, a joint-stock company, is very scarce. It is covered for the first time and is rated as "buy" investment.
Risk statement
The company's performance is lower than expected; The growth rate of Jianmin Dapeng pharmaceutical industry was lower than expected; Brand promotion was not as expected.
