\u3000\u Guangzhou Improve Medical Instruments Co.Ltd(300030) Cofco Biotechnology Co.Ltd(000930) 0009)
Event: the company released its annual report for 2021. In 2021, the company realized a revenue of 2.169 billion yuan, a year-on-year increase of 27.5%, and a net profit attributable to the parent company of 207 million yuan, a year-on-year increase of – 42.44%; The net profit deducted from non parent company was 159 million yuan, a year-on-year increase of – 50.08%.
In 2021q4, the company achieved a revenue of 621 million yuan, a year-on-year increase of + 13.18%, and a net profit attributable to the parent company of – 223 million yuan, a year-on-year increase of – 471.85%; The net profit deducted from non parent company was -251 million yuan, a year-on-year increase of -705.75%.
The overall performance was in line with expectations, and the impairment of goodwill dragged down the apparent. The company achieved 27.5% growth in revenue in 2021, in line with expectations; On the profit side, the company’s provision for goodwill impairment for SOHO Yiming and Sino German Meilian is about 323 million yuan, resulting in a decline in apparent profit. If it is added back, the company’s net profit attributable to the parent company is more than 500 million yuan, which is basically consistent with our previous prediction. By the end of 2021, the company’s goodwill balance was 58 million yuan, and it is expected that the subsequent apparent profit will not be disturbed by goodwill.
Growth hormone has achieved high growth in 21 years, and the growth momentum is sufficient after the release of production capacity. In 2021, the company achieved a biological product revenue of 1.3 billion yuan, a year-on-year increase of + 44.65%. Among them, the income of genetically engineered drugs was 1.24 billion yuan, a year-on-year increase of + 45.43%. According to our model, most of the company’s genetic engineering drug revenue comes from growth hormone and a small part from interferon. It is estimated that the growth hormone revenue will exceed 1.1 billion yuan, a year-on-year increase of + 50%. According to the announcement of the company, the specifications of 6iu and 8iu of the company’s water injection have been approved in early August of 21, which has solved the problem of incomplete specifications. At the same time, the company’s growth hormone powder injection was approved in September to increase the indications of “idiopathic dwarfism”, which has made an important breakthrough. At present, the company’s growth hormone has been approved with 8 indications, the most among Chinese enterprises; According to the company’s previous announcement, idiopathic short stature accounts for about 60% – 80% of all short stature children. We expect that the approval of the indication of idiopathic short stature will significantly improve the scope of the company’s growth hormone applicable population and drive the growth of sales. In addition, the production line with an annual output of 20 million recombinant human growth hormone was approved in March 22. After the release of production capacity, the company’s growth hormone is expected to usher in accelerated growth.
The effect of intensive collection of growth hormone is clarified. In the centralized collection of growth hormone in Guangdong Province, which ended in March 2022, no enterprise won the bid for growth hormone water injection, and Anhui Anke Biotechnology (Group)Co.Ltd(300009) powder injection won the bid for P1 price, which obtained 70% of the quoted volume of its own enterprises, and the price decreased by about 25% compared with the online price. On the one hand, the price reduction of powder injection will bring some pressure to the growth of the company, on the other hand, it may promote the growth of quantity. In addition, the price of the company’s water needle has not changed. With the release of new production capacity, the volume will be accelerated in the future. In 2021, Yugao medical, which is controlled by the company, set up new clinics in Changsha and Jinan, which is expected to become an important self owned terminal controlled by the company in the future. Other businesses are relatively stable, and the reform of subsidiaries is expected to be promoted. The income of Chinese patent medicine was 520 million yuan, a year-on-year increase of + 13.7%; The income of chemical drugs was 135 million yuan, a year-on-year increase of + 6.7%; The revenue of API was 63 million yuan, a year-on-year increase of + 5.6%; The income from technical services was 95 million yuan, a year-on-year increase of – 19.7%. The company proposes to actively explore the management reform of subsidiaries, so as to bind the management of subsidiaries with the interests of the company, so as to continuously stimulate the development vitality of subsidiaries. Previously, the company has encouraged Yu Liangqing, a subsidiary, and other subsidiaries are expected to undergo positive changes in the future.
Research and development of key projects continued to advance. The company has reported the production of HER2 monoclonal antibody, and the anti VEGF monoclonal antibody has entered the preparation stage of production reporting; Peg growth hormone long-acting water needle to be reported; Recombinant human follicle stimulating hormone injection, fusion protein long-acting growth hormone and a double antibody are planned to be submitted to the clinic in 2022; Hankemaibo tumor class 1 innovative drug “zg033 injection” was approved for clinical use.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 660 million, RMB 870 million and RMB 1.13 billion respectively, with the corresponding growth rate of 217.4%, 32.1% and 29.8%. The corresponding PE of the current stock price is 25 / 19 / 15x, maintaining the “buy” rating.
Risk warning: the promotion of new products is not as expected; Impairment of goodwill and intangible assets; Market competition intensifies risks; Risk of new drug research and development; There is a risk of sharp price reduction in the centralized purchase of growth hormone.
