\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 557 Jiangsu Kanion Pharmaceutical Co.Ltd(600557) )
Event: on April 11, 2022, the company released the first quarter report of 2022. From January to March, 2022, the company realized an operating revenue of 1.079 billion yuan, a year-on-year increase of 25.16%; The net profit attributable to the parent company was 110 million yuan, a year-on-year increase of 30.94%; The net profit deducted from non parent company was 107 million yuan, with a year-on-year increase of 34.69%.
Injection rebounded at the bottom, and oral dosage forms increased rapidly. From the operating data, 2022q1 injection achieved an operating revenue of 399 million yuan, a year-on-year increase of 40.47%, mainly due to the rapid growth of sales of Reduning injection; 2022q1 oral liquid achieved an operating revenue of 248 million yuan, a year-on-year increase of 69.34%, mainly due to the rapid growth of sales of Jinzhen oral liquid. The company’s injection varieties have been seriously affected by policy restrictions and epidemic situation in the past two years. The sales in 2019 was 2.346 billion yuan, and the sales in 2020 and 2021 were only 1.106 billion yuan and 1.304 billion yuan respectively. With the easing of policy and epidemic situation, the company’s injection business is expected to hit the bottom and rebound. At the same time, the oral dosage forms represented by Jinzhen oral liquid have grown rapidly into first-line varieties during this period, We believe that the inflection point of the company’s operation has arrived at the present stage. In terms of operation quality, the overall gross profit margin of 2022q1 company was 71.47%, an increase of 0.39pct year-on-year; The overall net interest rate was 10.23%, with a year-on-year increase of 0.31pct; The sales expense ratio was 41.16%, with a year-on-year decrease of 0.78 PCT; The rate of administrative expenses was 3.43%, a year-on-year decrease of 0.19 PCT; The R & D expense ratio was 13.37%, with a year-on-year increase of 1.35pct. We believe that the company is a leading company in the field of Chinese traditional medicine innovation. With the continuous improvement of business quality, the rebound of injection at the bottom and the rapid and large-scale addition of new varieties, the performance is expected to enter a period of rapid growth.
The equity incentive plan was issued and the performance evaluation standard was strict. On April 11, 2022, the company issued the equity incentive plan, which is expected to cover no more than 163 employees, including 7 senior management teams, including no more than 156 middle-level managers and core backbones. The total number of restricted shares granted is 8.8 million shares (including 800000 shares reserved), accounting for 1.53% of the current total share capital of the company. The stock grant price is 7.92 yuan / share, which is about 49.4% lower than the latest closing price (April 11). From the perspective of performance assessment standards, the year-on-year growth rate of the company’s target operating revenue from 2022 to 2024 shall not be less than 22%, 20% and 18% respectively, the year-on-year growth rate of target net profit shall not be less than 24%, 22% and 20% respectively, and the year-on-year growth rate of target operating revenue of non injection products shall not be less than 22%, 23% and 22% respectively. We believe that the company’s equity incentive plan covers a wide range of people and strict performance evaluation standards. It takes into account not only the growth of the company’s overall business, but also the optimization of long-term product structure, with clear objectives and clear paths.
Investment suggestion: we estimate that the company’s operating revenue from 2022 to 2024 will be 4.537 billion, 5.532 billion and 6.603 billion respectively, and the net profit attributable to the parent company will be 410 million, 510 million and 628 million respectively. The corresponding price earnings ratio (PE) will be 22.6 times, 18.1 times and 14.7 times respectively, giving the investment rating of buy-a.
Risk warning: uncertainty risk of industrial policy; Risk of failure in research and development of new products; Covid-19 epidemic uncertainty risk.
