\u3000\u3 Guocheng Mining Co.Ltd(000688) 553 Sichuan Huiyu Pharmaceutical Co.Ltd(688553) )
Core view
Event: the company released its 2021 annual report, realizing an operating revenue of 1.824 billion yuan (+ 33.69%), a net profit attributable to shareholders of the listed company of 446 million yuan (+ 29.87%), and a net profit attributable to shareholders of the listed company of 410 million yuan (+ 26.22%) after deduction.
Pemetrexed grew steadily, and the second-line varieties began to increase in large quantities. By product, pemetrexed’s revenue in 2021 was 1.447 billion yuan (+ 17.09%), maintaining a steady growth. Oxaliplatin injection, docetaxel injection, Paclitaxel injection and bendamostine hydrochloride for injection were selected as the fifth batch of national centralized collection. The standard was implemented successively from September 2021 and entered the mass production period. The income of docetaxel was 151 million yuan (+ 64.68%), and the income of oxaliplatin injection was 77 million yuan. Considering the limited implementation time of centralized purchase in 2021, we believe that the above varieties are expected to usher in rapid growth in 2022. Azacytidine has a revenue of 105 million yuan (+ 487.69%), which is the third batch of centralized varieties of the country and continues to maintain a high-speed growth trend in 2021.
China’s product echelon has been continuously improved, and it is expected to ensure continuous growth of performance with the help of centralized procurement. In 2021, the company registered and approved four varieties in China, including oxaliplatin injection, bendamostine hydrochloride for injection, irinotecan hydrochloride injection and palonosetron hydrochloride injection. Since 2022, bortezomib for injection and levetiracetam for injection have been approved and put on the market. At present, 11 varieties are still in the stage of registration and approval in China. The varieties declared by the company in China are all products with large market scale and high technical difficulty, which are expected to enter the volume procurement under less competition. It is expected that they will still have good profitability after centralized mining.
Investment in R & D has increased, and the layout of innovative drugs has gradually become clear. In 2021, the company’s R & D expenses were 248 million yuan (+ 179.6%), accounting for 13.61% of its operating revenue. Among them, the R & D investment of innovative drugs was 755822 million yuan (+ 720.51%). By the end of 2021, the company has more than 80 research projects, including 10 class I innovative drug projects. In terms of generic drugs, in addition to continuing to promote the R & D of injections, cyclophosphamide for injection, paclitaxel albumin injection, goserelin acetate sustained-release implant, lanreotide acetate sustained-release preparation, doxorubicin hydrochloride liposome injection, iron and other complex injections and other key projects are expected to be applied for registration outside China in 2022. Class I innovative drug hy-0003 contrast agent is expected to be applied for clinical application at the end of 2022 and hy-0002 is expected to be applied for clinical application at the beginning of 2023. The layout of innovative drugs of the company is gradually clear.
Overseas revenue has increased significantly, which is expected to become a new performance growth point. In 2021, the company’s overseas revenue was 67.29 million yuan (+ 143.96%), which is expected to be mainly driven by the growth of azacytidine and other varieties. Seacross pharmaceuticals Ltd, a subsidiary responsible for drug sales in the UK and Europe, achieved a net profit of 14.84 million yuan. At present, 12 varieties of the company have been approved for listing overseas, and a total of 50 new approvals have been obtained in 2021. The company has accumulated more than 200 overseas independent and authorized partner approvals, covering 51 countries, an increase of about 15 countries compared with 2020. At the same time, 110 overseas approvals (including independent and authorized partner approvals) have been submitted for registration in 2021, and more than 160 overseas registration approvals are currently pending approval. In addition to continuing to cultivate the UK market, the company has started the preparation for on-site inspection of FDA certification in the United States, and simultaneously carried out the application of cyclophosphamide and other varieties. With the abundance of overseas products and the expansion of coverage area, it is expected that the overseas market will become a new performance growth point of the company.
Profit forecast and Valuation: as the price of the core variety pemetrexed decreases in the renewal of centralized purchase, we think it will have a certain impact on the company’s performance in 2022. However, from 2022, the company will enter the period of rapid enrichment of product line. Through the continuous improvement of product echelon, the company can ensure the continuous availability of products. With the help of centralized purchase and large volume, it can effectively disperse the pressure of price reduction of single variety in the medium and long term and ensure the continuous growth of performance. At the same time, the rapid growth of the company’s overseas revenue will also become a new performance growth point. We estimate that the company’s revenue from 2022 to 2024 will be RMB 1.822 billion, RMB 2.091 billion and RMB 2.525 billion respectively, with a year-on-year growth rate of – 0.1%, 14.8% and 20.7%; The net profit attributable to the parent company was RMB 422 million, RMB 479 million and RMB 576 million respectively, with a year-on-year growth rate of – 5.3%, 13.5% and 20.2%. Based on the closing price on April 7, the corresponding PE was 27.5, 24.3 and 20.2 times respectively. The “overweight” rating was given for the first time.
Risk tip: the price reduction of pemetrexed is higher than expected; The progress of products approved / included in centralized purchase is lower than expected, resulting in the delay of large-scale time; Overseas registration / market development progress is lower than expected.
