Chongqing Taiji Industry (Group) Co.Ltd(600129) (600129)
Key investment points
Event: on] December 31, 2021, the company issued the outline of the “14th five year plan” strategic plan (2021-2025), proposing to strive to achieve an operating revenue of 50 billion yuan by the end of the “14th five year plan” through endogenous development and extension expansion in the future, with a net profit margin not lower than the average level of the pharmaceutical industry, and strive to become a world-class traditional Chinese medicine enterprise.
Clear strategic objectives and strive to break through 50 billion yuan of revenue. From the perspective of strategic objectives, the company puts forward three development directions: Taking Modern Traditional Chinese medicine manufacturing as the main line, supplemented by hemp essence characteristic chemical drugs and regional commercial leading enterprises. The company will become the strategic growth pole of Sinopharm group in Western China. Through endogenous development and extension expansion, the company will strive to achieve an operating revenue of 50 billion yuan at the end of the 14th five year plan, with a net profit margin not lower than the average level of the pharmaceutical industry, and strive to become a world-class traditional Chinese medicine enterprise. According to our statistics, the average net profit margin of pharmaceutical companies listed on A-share market in recent five years (excluding companies with net profit margin less than zero) is 16%. Assuming that the net profit margin of the company will recover to 10% by 2025, it is expected to exceed 5 billion yuan.
Endogenous accelerated transformation, epitaxial expansion and leapfrog development. 1) Endogenous: at the management level, it focuses on the transformation of variety strategy and marketing strategy, standardizing governance and improving efficiency. ① Develop innovative drugs and secondary development of main varieties to strengthen key categories. Strengthen R & D investment. At the end of the 14th five year plan, the investment intensity of the whole company will exceed 5% (industrial proportion), and accelerate the construction of Taiji science and innovation center. ② Innovate the marketing mechanism and mode, innovate the incentive mechanism and elimination mechanism, promote digital marketing, ensure the annual growth of backbone products by more than 30%, adhere to academic marketing in the medical market, expand channels and expand regions at OTC end. We expect that by 2025, Huoxiang Zhengqi oral liquid is expected to exceed 3 billion yuan and create three core key varieties with more than 1 billion yuan. ③ The company will promote standardized governance, establish a personnel elimination and withdrawal mechanism, deepen the reform of distribution and incentive, and establish an incentive distribution mechanism dominated by post value and performance contribution. 2) Extension: capital market operation helps leapfrog development. The company actively promoted capital and share increase, introduced development funds, reduced asset liability ratio, and actively sought mergers and acquisitions of outstanding enterprises in the industry.
Profit forecast: in view of the rapid improvement of operating performance brought by the entry of Sinopharm into Taiji, and considering the investment income in 2021, it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 310 million yuan, 520 million yuan and 780 million yuan respectively, and the EPS from 2021 to 2023 will be 57 yuan, 93 yuan and 1.4 yuan respectively, corresponding to 40 times, 24 times and 16 times of PE respectively.
Risk tips: the cost control is less than expected, the sales of core varieties is less than expected, and the disposal of land assets is less than expected.
