Guizhou Sanli Pharmaceutical Co.Ltd(603439) (603439)
Main points:
The exclusive variety Kai throat spray is expected to peak at about 2 billion yuan.
The company’s exclusive variety of larynx sword spray is derived from autobiography and Miao medicine prescription. It has high safety, remarkable curative effect, convenient use, high compliance of children and prominent advantages of dosage form. In 2009, Kai Yan Jian sprays (children’s type) entered the national health insurance catalogue in the year. In 2014, the throat sprays sprout (children’s type) and the laryngeal sword sprays became the famous brand products of Guizhou province. In 2018, the open throat spray (child type) was successfully selected by the Guangdong provincial health and Family Planning Commission and the Guangdong provincial Chinese Medicine issued the guideline for the diagnosis and treatment of hand foot and mouth disease in Guangdong (2018 Edition), and it is the only child specific dosage form for local pharyngeal medication. The ranking of Kaihoujian Series in the Chinese patent medicine market for throat diseases rose from 32nd in 2011 to 4th in 2017, ranking first in the Chinese patent medicine market for children’s throat diseases for many consecutive years. The incidence rate of throat diseases is high, and the potential medical care population is about 400 million. We believe that the company’s throat spray is a traditional Chinese medicine formula, and has the potential to become a large single product. The peak annual market share is expected to reach 10%, and the next year’s consumption is 2 boxes. The peak sales in the next year will be about 2 billion yuan.
At present, the supply of drugs for children is insufficient, and the state actively encourages the research and development of drugs for children
At present, China’s children’s drug market is still in a situation of few special varieties, few suitable dosage forms and few production enterprises. The research and development of children’s drugs is relatively difficult, the cycle is longer and the evaluation is difficult. Moreover, some adult drugs also occupy a certain children’s drug market, which brings difficulties to the research and development and marketing of children’s drugs. The state has issued documents for many times to encourage the research and development of children’s drugs. In 2016, CDE issued the announcement on the basic principles for the evaluation of priority review and approval varieties of clinically urgently needed children’s drug applications and the first batch of priority review varieties. At present, there are a total of 106 varieties in the three batches of children’s drug lists to encourage the research and development of children’s drugs. As one of the important members of the family, parents are also more concerned about children’s health. They have high willingness to pay for children’s drugs and strong ability to pay. On the whole, children’s drugs have low dependence on medical insurance.
The company focuses on the long term, expands new categories and continues to look for excellent M & A targets
In 2020, the company participated in Hanfang pharmaceutical, and currently holds 25.64%. Through Hanfang pharmaceutical, the company has obtained new varieties such as Qijiao Shengbai capsule and gynecological reconstruction capsule. According to our calculation, Qijiao Shengbai capsule and gynecological reconstruction capsule are expected to grow into large varieties of 1 billion yuan and 500 million yuan respectively. At present, the company is participating in the bankruptcy reorganization of dechangxiang pharmaceutical, a century old traditional Chinese medicine brand. “Dechangxiang” brand is a century old brand with great influence. It was formerly Guiyang traditional Chinese medicine factory and has many high-quality drug approvals. In Dechang Xiang products, gynecological reconstituted pills, Duzhong Zang Gu pills, Fu De Kang foam aerosol, anti asthma aerosol, Gastrodia elata mixture (oral liquid) are famous brand products of Guizhou province. The company’s participation in the bankruptcy reorganization of dechangxiang pharmaceutical can help the company expand product types, solve the risk of relatively concentrated products, and promote the long-term and healthy development of the company
Investment advice
We expect that the company’s revenue from 2021 to 2025 is expected to reach 1.033 billion yuan, 1.257 billion yuan, 1.508 billion yuan, 1.793 billion yuan and 2.101 billion yuan respectively, with a compound growth rate of about 27.24% from 2021 to 2025. Considering the improvement of the performance of Hanfang pharmaceutical, an associate, and the investment income that can be contributed to the company every year, it is expected that the net profit attributable to the parent company will reach 154 million yuan, 211 million yuan, 278 million yuan, 340 million yuan and 404 million yuan respectively from 2021 to 2025, with a compound growth rate of about 33.86% from 2021 to 2025. The EPS from 2021 to 2023 is 0.38 yuan, 0.52 yuan and 0.68 yuan respectively, and the corresponding PE valuations are 42x, 30x and 23x respectively. In view of the great growth potential of the company’s exclusive varieties, and the company’s continuous M & A and expansion of new categories, the company has strong performance growth certainty in the next 3-5 years, covering for the first time and buying rating.
Risk statement
Marketing expansion is less than expected.
Large variety dependence risk.
The implementation of acquisition strategy is less than expected risk.
Product safety accident risk, etc
