\u3000\u30 China Baoan Group Co.Ltd(000009) 99 China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) )
Event: the company released its 2021 annual report, realizing an operating revenue of 15.32 billion yuan, a year-on-year increase of 12.3%; The net profit attributable to the parent company was 2.05 billion yuan, a year-on-year increase of 28.1%; The net profit attributable to the parent company after deduction was 1.85 billion yuan, a year-on-year increase of 38.8%.
CHC’s healthy consumer goods business grew steadily, and the platform value continued to highlight. The company’s health products business revenue increased by 1.7% year-on-year to 2029.2 billion yuan; The gross profit margin was 59.3%, with a year-on-year increase of 2.1pp. On the whole, the company’s CHC health consumer goods business has maintained relatively rapid growth, which is related to the low base in 2020. The company’s CHC business products cover a wide range of fields, including cold medicine, gastrointestinal medicine, skin disease medicine, cough and phlegm medicine, etc. the company’s “999” series brand value is scarce and has high market recognition. In the future, with the continuous expansion of product line, the accelerated improvement of terminal layout and the innovation of marketing model, the “999” series star brand still has the potential to raise prices. Unlike the limitations of traditional OTC on drugs, CHC covers a broader business scope. At present, the company continues to expand into the field of health and has broad growth space in the future.
The business structure of prescription drugs continues to be adjusted, and traditional Chinese medicine formula granules are expected to become a new growth point. In 2021, the company’s prescription drug business revenue was 5.35 billion yuan, a year-on-year increase of 2.8%; The gross profit margin was 65.5%, a year-on-year decrease 9pp. The company’s prescription drug business has continuously adjusted the product structure, the proportion of traditional Chinese medicine injection has decreased year by year, and the proportion of anti infection and other specialized drugs has also continued to decline. In 2021, the proportion of traditional Chinese medicine injection and anti infection business in operating revenue has decreased to about 4% and 6% respectively. It is expected that the business of traditional Chinese medicine injection and anti infection will be stable in the future. At present, the company vigorously develops the business of traditional Chinese medicine formula granules. It is a leading enterprise of traditional Chinese medicine formula granules, and can produce more than 600 kinds of single flavor formula granules. The formula particle business has a large market space and needs the capacity of the whole industry chain. The industry supervision is strict and the entry barriers are high. The company has a significant first mover advantage and is expected to lead the industry in the future.
R & D investment continues to increase, and the product line is expected to continue to enrich. In 2021, the company invested 630 million yuan in R & D, accounting for 4.1% of the operating revenue. There are 71 projects under research, mainly focusing on the strategic fields such as cancer, orthopedics, skin, respiration and anti infection. The product layout is based on the combination of imitation and innovation. Among them, the research of class 1 small molecule targeted anti-tumor new drug qbh-196 is progressing smoothly, and phase I clinical trials have been carried out. In 2021, dzqe, a class 1 innovative traditional Chinese medicine, was newly introduced to improve female climacteric symptoms. At present, preclinical preparations are under way.
Profit forecast and rating. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 2.36 billion yuan, 2.67 billion yuan and 2.97 billion yuan respectively, and the EPS will be 2.41 yuan, 2.73 yuan and 3.04 yuan respectively, corresponding to the current stock price valuation of 18 times, 16 times and 14 times respectively, giving a “buy” rating.
Risk warning: sales are less than expected; Risk of centralized purchase; Risk that the progress of products under development is less than expected.
