On March 31, Shandong Xinhua Pharmaceutical Company Limited(000756) announced the annual results of 2021. During the reporting period, the company achieved a revenue of 6.56 billion yuan, a year-on-year increase of 9.23%, a net profit of 362 million yuan, a year-on-year increase of 4.31%, and a deduction of non net profit of 291 million yuan, a year-on-year increase of 0.19%.
In this regard, Shandong Xinhua Pharmaceutical Company Limited(000756) said that the main reason for the growth was to overcome various difficulties such as the rapid rise in the price of raw materials and freight, the sharp appreciation of RMB and the downturn of market demand this year, give full play to the leading role of marketing, actively explore the product market, constantly consolidate the basic management, continuously promote cost reduction and efficiency increase, strengthen scientific and technological innovation, and maintain a good situation in the production and operation of the company.
As of the closing on March 31, Shandong Xinhua Pharmaceutical Company Limited(000756) closed at 9.84 yuan / share, up 2.17%.
“Net profit growth”
Shandong Xinhua Pharmaceutical Company Limited(000756) (hereinafter referred to as ” Shandong Xinhua Pharmaceutical Company Limited(000756) “), as the core subsidiary of Hualu Holding Group Co., Ltd. in the pharmaceutical sector, was established in 1943 and listed on the Shenzhen Stock Exchange in 1996. It is a chemical synthetic pharmaceutical enterprise, mainly engaged in the development, manufacturing and sales of chemical APIs, preparations and chemical products; The company’s main products are antipyretic and analgesic APIs, tablets, injections, capsules and pharmaceutical intermediates.
In the latest financial report for 2021, Shandong Xinhua Pharmaceutical Company Limited(000756) although the revenue and net profit have increased, it is not difficult to find that the net profit of Shandong Xinhua Pharmaceutical Company Limited(000756) has hardly increased significantly in recent three years compared with the revenue of the previous two years.
Specifically, from 2019 to 2021, the company’s revenue was 5.606 billion yuan, 6.005 billion yuan and 6.56 billion yuan respectively, but its net profit was only 323 million yuan, 347 million yuan and 362 million yuan respectively. Although the company’s revenue has increased significantly, the net profit is still standing still.
From the perspective of business structure, at present, most of the company’s revenue mainly comes from chemical raw materials, preparations, pharmaceutical intermediates and others, accounting for 41.78%, 39.81% and 18.41% of the revenue respectively, of which the proportion of the revenue of preparations is lower than 43.39% in 2020; In terms of gross profit margin, it has decreased by 6.4 percentage points to 27.04% compared with 33.44% in 2019.
In the face of the increase in revenue, but the net profit is stagnant, or due to the impact of the current chemical raw material preparation market. With the decline of the production, sales and price of chemical raw materials, the main business income of China National Chemical Engineering Co.Ltd(601117) drug raw materials manufacturing industry tends to decline as a whole.
According to the 2019 China Meheco Group Co.Ltd(600056) industrial economic operation report issued by China Meheco Group Co.Ltd(600056) Enterprise Management Association, China National Chemical Engineering Co.Ltd(601117) API achieved a main business income of 380.37 billion yuan in 2019, with a year-on-year increase of only 5%.
In addition, the discharge standard of water pollutants for pharmaceutical industry, which was officially implemented in 2008, has significantly increased the discharge standard, the environmental protection cost of pharmaceutical enterprises has increased, and some enterprises have been shut down or rectified.
The main revenue source of Shandong Xinhua Pharmaceutical Company Limited(000756) is chemical raw materials and preparations, which account for nearly 80% of the revenue. Judging from the current market, it may be difficult not to be affected.
playing hide and seek with investors
Or in order to solve the current revenue dilemma, Shandong Xinhua Pharmaceutical Company Limited(000756) announced to enter the medical and American industry in early December 2021.
First of all, the company’s main medical beauty product is “Phoenix needle”.
At that time, in addition to Shandong Xinhua Pharmaceutical Company Limited(000756) many companies have launched medical and aesthetic products related to “needles”, such as Bloomage Biotechnology Corporation Limited(688363) ‘s “child face needle” and Huadong Medicine Co.Ltd(000963) ‘s “girl needle” and so on. Therefore, the concept of regenerative medical beauty has received extensive attention from the market, and has gradually become the key layout direction of the medical beauty track. Many upstream enterprises in the medical beauty industry have accelerated the layout.
However, Shandong Xinhua Pharmaceutical Company Limited(000756) the “Phoenix needle” was linked with the concept of regenerative medicine and beauty by many investors due to the similarity of the naming structure between Shandong Xinhua Pharmaceutical Company Limited(000756) the “Phoenix needle” and girls’ needle and children’s face needle, as well as the reply of the company’s board secretary on the interactive exchange. Therefore, Shandong Xinhua Pharmaceutical Company Limited(000756) secondary market ushered in a sharp rise.
According to the data, its share price was still hovering at 7.51 yuan / share in November 2021. After it announced the “Phoenix needle” of medical beauty product, its share price rose to 12.62 yuan / share on December 22, 2021, up 40.49%, almost doubling.
The secondary market ushered in a sharp rise. What is the “Phoenix needle”?
According to the company’s answer on the interactive platform, the first generation of “Phoenix needle” belongs to class II mechanical products. It can repair damaged skin and aging skin mainly through micro needle operation or post photoelectric application.
Although Shandong Xinhua Pharmaceutical Company Limited(000756) said it was a second-class brand product, consumers often confused it with medical skin care products due to their insufficient understanding of brand skin care products. In fact, class II mechanical products are mainly used for post repair and application of medical and aesthetic projects, which are still medical dressings in essence. So, is it improper to call the smear medical dressing “needle”?
Therefore, the investor asked the enterprise whether the product was a medical dressing. In the answer, the enterprise only said that the product belonged to class II mechanical brand medical beauty products, and did not make a clear replyp align=”center” style=”text-align:center;”> (source: interactive screenshot)
Shandong Xinhua Pharmaceutical Company Limited(000756) seized the publicity opportunity for the “fire” that the secondary market finally ushered in, saying that the “Phoenix needle” would be launched by the end of 2021, but so far, has the product been launched? According to the latest answer of the board secretary on the interactive exchange, the company directly chose to avoid it.
In addition, according to the answer of the company’s board secretary in the interactive exchange in February this year, it said that the product is currently playing board in about 30 medical and institutions, and the approval documents of class II equipment are still being actively promoted. That is to say, at present, the approval of the product has not been obtained, and it will be used by consumers without obtaining the approval. Is it compliant?
The doubt of “Phoenix needle” has not been answered yet. Shandong Xinhua Pharmaceutical Company Limited(000756) in the interactive easy, the company also announced that it will launch a variety of products such as skin and hair in the future.
It should be noted that according to the annual report of 2021, the current liability ratio of Shandong Xinhua Pharmaceutical Company Limited(000756) has increased from 67.97% in 2019 to 74.76% in 2021.
When facing great debt repayment pressure, the company chose to enter medical beauty. Nowadays, functional skin care products and hair products are popular segments in the field of medical beauty. At present, with Shandong Xinhua Pharmaceutical Company Limited(000756) of funds, do you have sufficient funds for the R & D, production, sales and promotion of medical beauty products?
frequent fines for environmental problems
Recently, the surging news and Public Environmental Research Center (IPE) jointly released the environmental performance industry sub list of Chinese listed companies “environmental performance list of pharmaceutical manufacturing listed companies”, in which Shandong Xinhua Pharmaceutical Company Limited(000756) environmental performance score is – 79.10, ranking the second from the bottom of the list.
It is reported that the score of Shandong Xinhua Pharmaceutical Company Limited(000756) environmental performance decreased by 73.71 points compared with the previous period (May 14, 2021), the ranking of all A-Shares decreased by 1258, and the score decreased the most in the “list of environmental performance of pharmaceutical manufacturing listed companies”.
The reason why the score of Shandong Xinhua Pharmaceutical Company Limited(000756) environmental performance has fallen so much this time is mainly that the listed company itself and its wholly-owned subsidiaries, holding subsidiaries and associated companies have been fined by the local ecological environment department for exceeding environmental standards and violations for many times since 2021.
Specifically, in January and February 2022, Shandong Xinhua Pharmaceutical Company Limited(000756) was fined by Zibo Ecological Environment Bureau for “environmental violations in which the sewage outlet was not included in the management of sewage discharge license” and “environmental violations in which the discharge mode and direction of pollutants were inconsistent with the sewage discharge license”, involving 121500 yuan and 132500 yuan respectively; Shandong Xinhua Wanbo Chemical Co., Ltd., a wholly-owned subsidiary, was fined by Zibo Ecological Environment Bureau for “failing to implement emergency control measures” during the orange warning period of heavily polluted weather and the secondary control period of ozone “and” environmental violations in which the discharge mode and direction of pollutants are inconsistent with the discharge permit “, involving 87500 yuan and 81875 yuan respectively.
In addition, its holding subsidiaries Shandong Xinhua Pharmaceutical Company Limited(000756) (Shouguang) Co., Ltd. and Zibo Xinhua bailigo Pharmaceutical Co., Ltd. were also fined 65000 yuan and 81800 yuan respectively for “failing to timely maintain the exhaust pipeline flange of ammonia storage tank, resulting in material leakage” and “there are environmental violations in which the discharge mode and direction of pollutants are inconsistent with the discharge permit”.
It should be noted that according to the relevant provisions of the management measures, the company needs to disclose relevant punishment information in time, but so far, the reporter has not found the disclosure of punishment information in the announcement and public information channels of Shandong Xinhua Pharmaceutical Company Limited(000756) .
