\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 557 Jiangsu Kanion Pharmaceutical Co.Ltd(600557) )
The dilemma reversal has reached the right, and the follow-up is expected to start sustained and rapid growth. In 2021 and 2022q1, the company realized a net profit attributable to the parent company of RMB 321 million and 110 million respectively, an increase of 22% and 31% respectively, and walked out of the trough in 2020. In 2020, the company’s revenue and profit fell sharply. On the one hand, due to the covid-19 epidemic, the sales volume of respiratory products fell. On the other hand, the medical insurance winning price of Ginkgo diterpene lactone glucosamine injection decreased from 316 yuan to 93.7 yuan, resulting in short-term labor pains. From the quarterly trend of the company’s business in the past two years, the previous adverse factors have been basically eliminated, and the price reduction of Guangdong alliance centralized purchase of Reduning injection has also been successfully implemented (a decrease of 21%), and the whole company is expected to enter a new stage of accelerated development.
We will continue to pay attention to R & D investment, and the transformation of achievements will be accelerated under a favorable policy environment. With Academician level innovative development vision, the company has ranked first in the “ranking of traditional Chinese medicine R & D strength” for three consecutive years, and its R & D investment has always been in the forefront of the industry. In 2021, the R & D expenditure reached 500 million yuan, accounting for nearly 14% of the revenue, reaching a record high. In the past two years, the company has newly approved Yinqiao Qingre tablets and Jingu Zhitong gels, two new Chinese herbal medicines, and another 7 clinical Chinese medicine pipelines after the II phase, 2 new Chinese medicines approved for clinical use, and the early high R & D investment has laid a good foundation for further development. Under the policy environment that the state strongly supports the innovation of traditional Chinese medicine and improves the status of basic drugs, the company’s rich product reserves (43 exclusive traditional Chinese medicine, 23 exclusive medical insurance and 6 exclusive basic drugs) and R & D pipelines are expected to shine.
The product revenue structure has been significantly improved and the ability to resist risks has been enhanced. In the past two years, the business structure of the company is no longer dominated by large single products of injections. The proportion of injections has decreased from more than 50% to about 35%, and the unit price of products has decreased significantly from a high level. The risk has been effectively released and entered the era of volume increase. Jinzhen oral liquid, Xingbei Zhike granule, Guizhi Fuling Capsule and other oral preparations have continuously increased in the proportion of revenue. In 2021, the varieties of oral / external preparations have accounted for about 65% of the total revenue.
The trend of core items is better. Ginkgo diterpene lactone glucosamine injection continued to be sold at a high speed. From 2016 to 2021, the sales volume increased from 180000 to 10.29 million, achieving a CAGR of 124%, smoothing out the impact of price reduction. Reduning Injection stopped the downward trend in 2021 and is rebounding at the bottom. After the epidemic situation of Jinzhen oral liquid was controlled, the sales volume of Jinzhen oral liquid increased by 70% year-on-year in 21 years, driving the income of oral liquid to reach 670 million, a record high. We expect Jinzhen oral liquid will soon become a large pediatric single product with an income of more than one billion yuan.
The introduction of incentives is expected to accelerate the company’s performance. On the evening of April 11, 2022, the company issued the restricted stock incentive plan (Draft) for 2022, which plans to encourage no more than 163 core executives and sales R & D backbone, which is the first incentive plan in nearly five years since the stock option incentive in 2017. From the comprehensive judgment of incentive requirements, the company should achieve at least compound profit growth of more than 22% in 22-24 years, and non injections continue to maintain the current high proportion. The introduction of the company’s incentive plan is expected to accelerate the growth of the company’s performance.
Profit forecast: it is estimated that from 2022 to 2024, after deducting the incentive expenses, the net profit attributable to the parent company will be 435 million yuan, 555 million yuan and 697 million yuan respectively, with a year-on-year increase of 35.6%, 27.7% and 25.7%, and the corresponding PE will be 21 / 17 / 13X respectively. Compared with comparable companies, the company’s valuation cost performance is prominent, the R & D expense rate is significantly exceeded, and the market value has great potential. For the first time, it will be rated as “buy”.
Risk tips: risk of drug price change, risk of less than expected research and development, risk of slowing down sales of large single products, risk of market competition, etc
