\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 71 Hvsen Biotechnology Co.Ltd(300871) )
Key investment points
Performance summary: in 2021, the company achieved an operating revenue of 996 million yuan, a year-on-year increase of 28.1%, a net profit attributable to the parent company of 130 million yuan, a year-on-year decrease of 11.5%, and a net profit attributable to the parent company of 120 million yuan after deduction, a year-on-year decrease of 17.1%.
Comments: during the reporting period, the price of live pigs fell, and the breeding industry once entered a deep loss. The sales performance of the company rose by 28.1%, the sales of solid veterinary APIs and preparations reached 7891.4 tons, a year-on-year increase of 30.8%, and the sales of liquid APIs and preparations reached 1 million liters, a year-on-year increase of 21.9%. The proportion of group customers of the company further increased. The annual sales revenue of group customers was 610 million yuan, an increase of 41% year-on-year, and 449 direct sales customers were added. In the case of serious losses in downstream breeding, the company strengthened its risk control ability and implemented differentiated credit policy. The proportion of accounts receivable in total assets decreased by 3.1% year-on-year. The operating cost was 730 million yuan, with a year-on-year increase of 48.2%. The year-on-year decline in profit was mainly due to the impact of upstream API prices. The rise in bulk commodity prices increased the production cost of API. On the other hand, environmental protection inspection, dual control of energy consumption, “double carbon” policy, power restriction and other factors limited supply, resulting in the rise of API prices. At present, the price of API continues to fall back to the normal level. With reference to the price index of veterinary API (VPI), it was about 85 by the end of February, down 17.1% from the high point in October of 21. The profit margin of the company will be gradually improved, and the API projects will be put into operation in the second half of the year, which can fundamentally solve the problem of uncontrollable quality and price of API, grasp the integration of upstream and downstream, and get on the right track of development.
With the elimination of backward production capacity, the rapid development of veterinary chemical industry and the rapid improvement of industry concentration, the company is expected to rely on advantageous products to enhance customer stickiness and expand market share. In 2019, the number of enterprises in the national veterinary drug industry was 1632, with a year-on-year decrease of 4%. A number of policies strengthened management and promoted the transformation and upgrading of the industry. In June 2020, the new version of GMP acceptance and evaluation standard for veterinary drugs was implemented to improve the access threshold for veterinary drug production and avoid low-level repeated construction and overcapacity. It was specified that veterinary drug manufacturers must pass the new version of audit standard before June 1, 2022 before they can continue production and operation, and the backward production capacity will be eliminated by the market. At the same time, in order to ensure food safety and promote green breeding, Chinese feed production enterprises will be banned from July 2020. Referring to the experience of EU feed prohibition, the immunity of livestock and poultry may decline after the “Prohibition”, and the demand for antibiotics will increase accordingly in case of diseases. The company will give full play to the advantages of leading enterprises of veterinary drugs and grasp the increase of market demand, Increase operating income. The concentration of pig breeding industry has been continuously improved. The proportion of pigs sold by ten listed pig enterprises in the overall market has increased from 10.4% in 2020 to 14% in 2021. The awareness of epidemic prevention and control has been enhanced. The company has established a marketing network combining group customer direct sales and dealer channel sales, covering all kinds of veterinary drug end users. The proportion of group customers continues to increase, and further precision marketing will be carried out in the future, with better performance.
Grasp the advantages of the industrial chain and expand the product quality to the upstream of the company at the same time. The company’s product quality is not only recognized in China, but also exported to Southeast Asia, South Africa, South America and other places. At this stage, Hubei Xingou base is being actively built, including powder / powder / premix automatic production base and R & D quality inspection center. From the perspective of API, the existing tylosin production capacity is 240 tons, and the projects under construction are rapidly promoted. The tylosin project with an annual output of 1000 tons and the tylosin production line expansion project with an annual output of 600 tons have entered the equipment installation. Realize the integration of APIs and preparations, and further improve the cost and quality control ability of future products. At the same time, the company continued to strengthen research and development. During the reporting period, the company obtained new veterinary drug certificates of tediloxin (class II), tediloxin injection (class II) and gongamaran Zhili powder (Class III), and newly authorized 7 invention patents.
Profit forecast and investment suggestions. It is estimated that the EPS from 2022 to 2024 will be 1.21 yuan, 1.69 yuan and 2.25 yuan respectively, and the corresponding dynamic PE will be 22 / 15 / 12 times respectively, maintaining the “buy” rating.
Risk warning: there is an epidemic in the downstream aquaculture industry; The product sales were not as good as expected.
