\u3000\u3 Guocheng Mining Co.Ltd(000688) 513 Chengdu Easton Bio Pharmaceuticals Co.Ltd(688513) )
Matters:
The company released the performance report for 2021: the annual operating revenue was 1.023 billion yuan, a year-on-year increase of 10.96%; The net profit attributable to the parent company was 232 million yuan, a year-on-year increase of 30.46%, slightly higher than expected, mainly due to the increase of the company’s sales revenue and the increase of non recurring profits and losses such as financial management income; The net profit deducted from non parent company was 137 million yuan, with a year-on-year increase of 21.50%. Dividend plan: cash dividend of 7.80 yuan (including tax) per 10 shares.
Ping An View:
The growth of sales volume of core products and the rapid and large-scale production of centralized products jointly drive the improvement of performance: 1) in terms of main products, the annual sales volume of bisoprolol fumarate tablets, ibandronate sodium and caffeine citrate increased by 34%, 29% and 9% respectively year-on-year, driving the steady growth of performance; 2) Relying on the first and second advantages of Geshun injection and Guangcai injection in 2021, the company has made great efforts to expand the number of products of Geshun injection and Guangcai in 2021; 3) In terms of new products, the company obtained 3 new drug registration certificates and 5 supplementary approval documents for consistency evaluation during the reporting period, continuously increasing the company’s performance.
The company has accelerated the international layout of APIs and high-end preparations: 1) in terms of preparations, the company has arranged several anda high-end preparations according to the ideas of large clinical demand, good competition pattern and first imitation, forming a rich product echelon. Among them, ep-0084a & I project in the field of anesthesia and analgesia has obtained the CGT qualification granted by FDA, which is expected to accelerate the listing and obtain a 180 day exclusive period. We expect to complete the listing in 2023, Usher in the harvest period; 2) In terms of APIs, the company’s filocoxib, maropitam and tigrelol have passed the FDA on-site inspection, marking that the company’s GMP management of APIs has reached the international level. In addition, maropitam citrate and dabigatran mesylate have submitted registration applications to FDA, laying a solid foundation for the company to enter the global API supply chain.
Based on the company’s R & D strength, the company continued to enrich the technical platform capacity: during the reporting period, the company added a new mRNA raw material synthesis technology platform, and its core technologies include mRNA raw material process route design technology, high-yield phosphorus condensation technology, unstable nucleic acid structure purification technology, etc. At present, the company has built a kilogram scale production platform, completed the development of a number of mRNA cap structure analogues with higher purity than the market and in line with GMP standards, and the development of a number of complex modified nucleic acids with high purity and in line with GMP standards, and preliminarily verified the ability of the platform. With the continuous promotion of mRNA vaccine research and development in China and the continuous expansion of other application fields, this new technology platform is expected to bring new performance growth points to the company.
The innovative R & D of generic drug blood supply has gradually ushered in the harvest period of innovation: the R & D investment of the company in 2021 was 209 million yuan, accounting for 20.41% of the revenue, which is at a relatively high level among companies in the same industry. At present, the company has deployed more than 10 class 1 new drugs, of which 3 are in clinical trials, including oral long-acting DPP4 inhibitor eugliptin tablets (phase III), small molecule new drug cx3002 (phase II) in cardiovascular field and new drug ep-9001a monoclonal antibody (phase I) in analgesic field targeting NGF. Compared with enterprises only engaged in innovative drug development, the stable income brought by generic drug business enables the company to have more R & D funds to invest in innovation, and the risk of the model of combination of generic and innovative drugs is relatively lower. In the future, with the gradual listing of innovative drugs with high gross profit margin, the profitability of the company is expected to be further improved.
Maintain the company’s recommended rating: 1) the cost advantage of the integration of preparation and API improves the probability of winning the bid for centralized procurement of the company and promotes the large-scale production of “barefoot” varieties; 2) The company continues to improve the pipeline layout along the idea of first imitating and difficult imitating drugs. We expect that the company will have 8 new products on the market in 2023, and is expected to achieve rapid volume with the help of the company’s channels and brand effects; 3) The company’s international layout and innovative drug research and development are gradually ushering in a harvest period, bringing new profit growth points to the company’s performance; 4) The expansion of mRNA related new technology platform brings more opportunities for the company. Considering that the company’s products such as ibandronate have been included in the 7th batch of national centralized procurement list and the international layout is about to be fulfilled, we slightly reduced the company’s 22-year profit forecast and increased the 23-year profit forecast at the same time. It is estimated that the net profit of the company in 2022 / 2023 / 2024 will reach 279 million yuan (the former value is 285 million yuan), 364 million yuan (the former value is 353 million yuan) and 464 million yuan (New), and the EPS in 2022 / 2023 / 2024 will be 233 million yuan (the former value is 2.37 yuan), 303 yuan (the former value is 2.94 yuan) and 387 yuan (New), respectively, corresponding to the current share price PE of 23.6/18.1/14.2 times, maintaining the “recommended” rating of the company.
Risk tips: 1) risk of R & D failure: many products of the company are in the R & D stage, and there is a possibility that the progress is less than expected or even fails; 2) Risk of centralized procurement of drugs whose products fail to win the bid: the company’s drugs sold to public hospitals need to be purchased through bidding through provincial (regional and municipal) procurement platforms, and there may be a risk that the company’s products will not win the bid in the future; 3) Risk of products being transferred out of the medical insurance Catalogue: there is a risk that major products will be transferred out of the national medical insurance drug catalogue in the process of medical insurance catalogue adjustment in the future; 4) Policy risk: the company’s products under research involve fine hemp drugs, which belong to a strong regulatory industry, and there is a risk of changes in regulatory policies.
