\u3000\u3 China Vanke Co.Ltd(000002) 873 Guiyang Xintian Pharmaceutical Co.Ltd(002873) )
Event description
The company released its annual report for 2021, realizing an operating revenue of 970 million yuan, a year-on-year increase of 29.15%; The net profit attributable to the parent company was 101 million yuan, a year-on-year increase of 35.76%; Realize eps0 62 yuan, 1.20 yuan (including tax) is proposed to be sent for 10.
Event comments
The growth rate of the company’s revenue and profit exceeded the performance target of “doubling in three years”, and the performance entered the acceleration period. The company achieved an operating revenue of 970 million yuan in 2021, with a year-on-year increase of 29.15%; The net profit attributable to the parent company was 101 million yuan, a year-on-year increase of 35.76%; The net profit deducted from non parent company was 938394 million yuan, with a year-on-year increase of 32.21%; In 2021, the company’s comprehensive gross profit margin was 79.26%, an increase of 1.27 percentage points year-on-year. Roe is 11.70%, net interest rate is 10.37%, net operating cash flow is 124 million yuan, and total R & D investment is 28.89 million yuan. Last year, the company gave equity incentives to its core team and focused on the company’s marketing and R & D system. The goal of equity incentive is to double the revenue in three years, that is, based on the operating revenue in 2020, the operating revenue will maintain an annualized growth of 27% in the next three years. In 2021, the company’s performance exceeded the equity incentive target. At the same time, compared with the previous three years, the company’s performance entered an accelerated period.
Leading varieties enter the turning point of secondary growth, and small varieties provide new performance growth points. The main products include Kun Tai capsule (gynecological medication), Kushen gel (gynecological medication), ningmao capsule (urinary system), Prunella vulgaris oral liquid (heat clearing and detoxicating drugs) and other varieties, among which Kun Tai capsule and Kushen gel are “key city entity gynecology proprietary Chinese medicine brand TOP20”. In 2021, the company’s revenue of gynecological products was 686 million yuan, with a year-on-year increase of 31.83%, and the gross profit margin was 78.61%, with a year-on-year increase of 1.74 percentage points. The revenue of urinary products was 202 million yuan, a year-on-year increase of 22.76%, and the gross profit margin was 86.91%, a year-on-year increase of 0.11 percentage points. The income from heat clearing and detoxification was 68 million yuan, a year-on-year increase of 17.30%, and the gross profit margin was 66.44%, a year-on-year increase of 0.53 percentage points. In terms of income growth, the leading varieties Kuntai Capsule and Ningbitai Capsule have entered a period of accelerated growth. In addition, the company will launch the market promotion of other advantageous varieties and cultivate new performance growth points. The company has a small market in the production of products, regulating menstruation blood circulation capsule, Xinli Kang capsule, dragon palm oral liquid, Danggui Yi Xue oral liquid and so on are exclusive varieties, has a good market prospect. There are also 445 varieties of traditional Chinese medicine formula granules that have been approved. The company plans to launch promotion activities and cultivate new performance growth points according to market conditions and capacity arrangements.
Channel expansion and brand building to ensure the accelerated growth of leading products. The company has a sales force of nearly 400 people, covering more than 12000 hospitals above county (District) level, including more than 1300 tertiary hospitals, and has established long-term and stable business relations with more than 1500 medical commercial units in China; OTC products cover more than 700 pharmaceutical chain companies and more than 90000 stores, and have established long-term and stable business relations with the headquarters of more than 300 pharmaceutical chain companies in China. The coverage of OTC stores continues to increase, increase Internet online sales investment, and realize the OTC series “Omo Online + offline integration” marketing mode. At present, the company’s OTC sales account for about 30%. The company plans to increase the proportion of OTC sales to about 50% on the premise of maintaining the overall sales growth. The company will also strengthen brand building to keep harmony with Yan ® Brand building as the center, fine management and brand driven to improve the overall sales of gynecological products.
During this period, the expense rate decreased and the R & D investment continued to grow: in 2021, the company’s sales expense rate and management expense rate were 48.65% and 13.85% respectively, of which the equity incentive fee was about 8.88 million yuan. After deducting the equity incentive fee, the company’s management expense rate was 12.9%, which was lower than that in 2020. With a series of optimization measures such as refined management, efficiency improvement and cost control, the operation efficiency will be further improved, and the profitability is expected to continue to grow in the future.
In terms of R & D, the company has three main R & D platforms: Guiyang technology center, wholly-owned subsidiary Haitian medicine and Shuofeng medicine, which undertake the R & D of traditional Chinese medicine formula particles, re research of listed varieties, new traditional Chinese medicine and ancient classic prescriptions respectively. In terms of research and development ideas, the company is in line with the innovative concept of modern traditional Chinese medicine and traditional Chinese medicine, does not stick to the identity of traditional Chinese medicine, and the curative effect is compared with the clinical front-line traditional Chinese medicine and chemical medicine therapy. In the direction of “traditional prescription of traditional Chinese medicine + modern technology and big data + clinical verification”, the infrastructure construction and investment layout of multi-dimensional R & D system have been carried out, forming a relatively perfect R & D drug R & D system. The 3 new Chinese medicine products, including long Cen pelvic cavity Shu granule, Ku Er Jie Yin gel and Shu Yu Tong granule, have completed the phase three clinical trials, and are expected to produce products this year. The company’s leading varieties Kuntai Capsule and Ningbitai Capsule, if developed now, belong to class 1 new drugs according to the new classification standard of traditional Chinese medicine. In the research and development of formula granules, the company currently has 445 varieties of traditional Chinese medicine formula granules, of which 60 have been filed with the national standard; The industrial chain layout of formula granule products has been completed and industrialized sales have been realized in 2021. There are also many R & D reserves of traditional Chinese medicine, new drugs and classic famous prescriptions covering the fields of Gynecology, pediatrics, respiratory and chronic diseases.
Investment advice
We believe that great changes are taking place in the traditional Chinese medicine industry. The introduction of new management measures for classification and registration of traditional Chinese medicine has solved the problems that have plagued the traditional Chinese medicine industry for many years, and the innovative drugs of traditional Chinese medicine are gradually approaching. The company adheres to the research of innovative traditional Chinese medicine. If the products that have been listed and will be listed are developed now, they all belong to class 1 new traditional Chinese medicine according to the new classification standards. In terms of sales, the company has expanded OTC channels, increased online sales, controlled fees and increased efficiency, increased brand investment, and started the sales promotion of second-line varieties. The R & D of new varieties will be reported for production this year. A product pattern of “traditional Chinese medicine innovative drugs + traditional Chinese Medicine formula particles and classic famous prescriptions under research + small component chemical drugs under investment” has been formed. We believe that the equity incentive goal of the company this year is still expected to be completed beyond expectations. It is estimated that the company’s EPS from 2022 to 2024 will be 0.82 1.12 1.51 respectively. Based on the closing price of 23.78 yuan on March 24, PE will be 29.2 21.3 15.7 times respectively, giving a “buy” rating.
There are risks
Industry policy risks: medical insurance fee control, centralized purchase and price reduction of traditional Chinese medicine, etc; The risk that the progress of product R & D and listing is slower than expected; Drug quality risk; Risks of high pledge rate of major shareholders, etc
