\u3000\u30 China Baoan Group Co.Ltd(000009) 63 Huadong Medicine Co.Ltd(000963) )
Core view
There are some deficiencies in the market’s understanding of the company. This report makes an in-depth analysis on several key issues most concerned by the market: 1) what is the level of the company’s medical and American pipeline in the whole industry? 2) When will the company’s industrial pharmaceutical sector bottom out? How much impact does guotan / centralized purchase have on the company’s performance? 3) What are the highlights of the company that have not attracted enough attention?
What is the level of the company’s medical and American pipeline in the whole industry?
To evaluate whether the medical beauty business is excellent or not, we must first clarify the two most critical abilities for developing the medical beauty business: BD and marketing. The former determines the quality of the company’s pipeline, and the latter determines whether the pipeline products can be cashed.
Compared with the whole industry, the medical and beauty sector of the company is the first echelon of the industry. First, the product pipeline has both quality and quantity. The pipeline covers injections and medical devices, with the highest richness; It also involves blue ocean competitions such as regenerative preparations and weight management. The company’s products are ahead of schedule and have differentiation advantages. The second is the marketing ability. It can be seen from the sales of about 150 million yuan in only four months after the girl needle was listed. One or two worries about the ability of its new medical beauty sales team have been cleared away. The company’s marketing ability lays the foundation for the manufacturing capacity of its popular varieties, and the high-level pipeline layout also supports the possibility of its continuous launch of popular models. We predict that the company’s medical beauty business is expected to develop at a high growth rate of more than 30% from 2021 to 2023, and the revenue from 2021 to 2023 is expected to be 720 / 1103 / 1435 million yuan (126% / 53% / 30% YoY) respectively.
When will the industrial pharmaceutical sector bottom? How much impact will it have on the company’s performance?
In the medium term, the performance impact of the company’s industrial pharmaceutical sector is mainly concentrated in two waves. The first wave is from 2020 to 2021, which has experienced the falling of the standard of Acarbose Tablets, the price reduction of Bailing capsule into the centralized collection of medical insurance, pantoprazole sodium and other varieties. The growth rate of the off-site market of Acarbose Tablets is stable, and the sales of Bailing capsule are improved after the price reduction. The growth rate of the two products is expected to reverse upward in 2022 (if the bid renewal of Acarbose Tablets is won as an incremental market, it will not be included temporarily). Pantoprazole sodium enters the centralized collection, and the risk is cleared. The second shock is expected to focus on 20252026, mainly from the risk of centralized purchase of pioglitazone metformin tablets, the risk of patent cliff after the expiration of nisina patent and the risk of price reduction of indobufen.
Divide the company’s products into one, two and three echelons according to their volume and life cycle. The first wave of performance shock mainly comes from the performance decline of heavy products of the first tier. At present, the corresponding policy risks are basically cleared, the downward trend of main products will stop in 2022, and the maturity of main products of the second tier (such as pioglitazone, metformin tablets, nisina, etc.) will further digest the first wave of performance shock. The second wave of performance shock is also expected to be smoothed through the large-scale listing of third tier products (such as liraglutide).
According to our calculation, the downward trend of industrial pharmacy is expected to stop in 2021, and it is expected to achieve a positive growth of nearly 10% in 2022, with a revenue of more than 11.5 billion yuan. Combined with the rapid development of other sectors in 2022, we believe that the company’s performance has reached the end of 2021. It is estimated that the revenue of industrial pharmaceutical sector from 2021 to 2023 will be 10.651/11.689/12.724 billion yuan (- 5.8% / 9.7% / 8.9% YoY).
What are the highlights of the company that have not attracted enough attention?
In addition to the industrial pharmaceutical business in the advantageous sector and the medical beauty business in the star sector, the company’s synthetic biology related business is also rising (mainly cdmo at present).
Compared with traditional chemical synthesis methods, synthetic biology has the advantages of high quality, high yield, low cost and green environmental protection. It is in line with the important national policy of carbon peak and carbon neutralization. At the same time, it is also in line with the requirements of green production emphasized in the 14th five year plan of medicine; The terminal application field is broad and is expected to breed a market space of 10 billion US dollars.
Synthetic biology is a systematic engineering with high patent barriers and technical barriers. The company has been deeply engaged in the field of industrial microbiology for many years, and has accumulated the whole process technology of early strain construction and later scale-up production. With the continuous release of production capacity in 2022, the revenue of this sector is expected to maintain a high-speed growth of more than 30% in the next three to five years. It is estimated that the revenue of cdmo sector from 2021 to 2023 will be 320 / 810 / 1134 million yuan respectively (276% / 153% / 40% YoY).
Company profit forecast and valuation
It is estimated that the operating revenue of the company from 2021 to 2023 will be 35.618 billion yuan, 38.438 billion yuan and 41.865 billion yuan respectively, with a year-on-year increase of 5.7%, 7.9% and 8.9%; The net profit attributable to the parent company was 2.559 billion yuan, 3.188 billion yuan and 3.772 billion yuan respectively, with a year-on-year increase of – 9.2%, 24.6% and 18.3%; The corresponding EPS is 1.46, 1.82 and 2.16 yuan respectively, and the corresponding PE is 24.8, 19.9 and 16.8 times respectively. The company’s business is divided into four business segments: Industrial Pharmacy, medical beauty business, cdmo and commercial circulation. Referring to the average valuation of comparable companies in each segment, the company is evaluated by segments. The overall valuation of the company is 85 billion yuan, and the current valuation is 53.8 billion yuan. For the first time, the investment rating of “buy” is given.
Risk warning: the risk of exceeding the expected strength of policies such as national negotiation and centralized procurement; Risk that the progress of product R & D and promotion is less than expected.
