\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 71 Hvsen Biotechnology Co.Ltd(300871) )
Animal chemical medicine leader, with rich categories of chemical medicine products Hvsen Biotechnology Co.Ltd(300871) was established in 2002, mainly engaged in the R & D, production and sales of veterinary drugs, feed and additives. By the end of 2021, 143 veterinary drug approval numbers had been obtained. The product quality is excellent. From 2012 to 2021, the batch of unqualified products in the veterinary drug quality supervision and sampling inspection of the Ministry of agriculture and rural areas has been kept at zero for 10 consecutive years. The sales scale ranks among the top 10 enterprises in the field of veterinary chemical preparations in China. In 2021, the company realized a revenue of 996 million yuan (YoY + 28.14%) and a net profit attributable to the parent company of 133 million yuan (yoy-11.52%).
Veterinary drug industry: the "prohibition and resistance" policy promotes the upgrading of demand, and the standardization trend is good for the leader. The rapid development of the breeding industry and the improvement of epidemic prevention awareness promote the rapid development of the animal protection industry. In 2020, the sales scale of the industry was about 62.1 billion yuan (YoY + 23.2%), including 45.859 billion yuan (YoY + 18.9%) of veterinary chemical drugs, accounting for 73.9% of the sales in 2020. Since July 2020, China has officially ushered in the comprehensive prohibition of feed resistance, and the demand for chemical drugs has been transformed to therapeutic chemical drugs. At the same time, under the new GMP standard, the backward industry capacity that has not reached the new standard has not been eliminated or eliminated as of May 31, 2022, the degree of industry standardization has been improved, and the industry leaders are expected to benefit.
Excellent R & D capability, supporting rich product layout + improvement of production efficiency. Through strong R & D investment, the company continued to expand products, improve production capacity, improve quality and efficiency, and continuously enhance the innovation ability of comprehensive veterinary drug solutions. Gradually expand from pig products to poultry, aquatic products, pets, ruminant and other fields. In 2021, the company obtained three new veterinary drug certificates and seven newly authorized invention patents. At the same time, a number of other new veterinary drugs were under research. In the same period, the production process was upgraded to increase the average single batch production capacity of tywanmycin by 11%.
Direct selling & distribution "two wings fly together", the proportion of group customers has increased, and the distribution channel has increased against the trend. In line with the large-scale development trend of the downstream aquaculture industry, the company has established a group customer sales department to provide customized services for large-scale customers from multiple angles, supplemented by distribution channels to meet the needs of small and medium-sized retail investors. In 2020 / 2021, the group customers of the company realized a sales revenue of 430 million yuan / 610 million yuan, with a year-on-year high-speed growth of 112.68% / 41.03% respectively, and the proportion of group customers' revenue increased to 60% +. In the same period, the sales revenue of distribution channels was 310 million yuan / 370 million yuan, with a year-on-year increase of 53.64% / 17.31%. It realized contrarian growth under the background of de production capacity of pig industry in 2021.
The integration of APIs and preparations and the large volume of new production capacity are expected to support the significant improvement of profitability. The company has steadily extended from the preparation to the upstream API, with the existing tylosin production capacity of 240 tons. In addition, the IPO API production capacity projects in 2020 include the over raised project, the 1000 ton tylosin production capacity project, and the convertible bond API production capacity project in 2021 includes the expansion project of the tylosin production line with an annual output of 1000 tons and the tylosin production line with an annual output of 600 tons. The API production capacity is gradually released, which is expected to fully ensure the product quality and supply, and the cost control ability is expected to be improved, Profitability is expected to improve.
Profit forecast: as the leader of veterinary chemical medicine industry, the company has excellent R & D and production capacity, rich product categories, integrated development of API and preparation, and the release of production capacity is imminent. We are optimistic that the company will continue to have high growth potential in the field of macrolide high-end chemical drugs under the background of industry demand optimization. It is estimated that the net profit attributable to the parent company from fy2022 to fy2024 is 203 million yuan / 285 million yuan / 385 million yuan, an increase of 52.61% / 40.35% / 35.42% at the same time, and the corresponding EPS is 1.22/1.71/2.32 yuan / share respectively. We believe that the reasonable market value of fy2022 is 5.684 billion yuan, the corresponding target price is 34.16 yuan, and the corresponding pe28x is "buy" for the first time.
Risk tip: the reversal of the breeding industry is less than expected, the company's production capacity is less than expected, and the outbreak of animal diseases.
