\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 557 Jiangsu Kanion Pharmaceutical Co.Ltd(600557) )
[key points of investment]
The company’s performance achieved good growth. In 2021, the company achieved an operating revenue of 3.649 billion yuan, a year-on-year increase of + 20.34%; The net profit attributable to the parent company was 321 million yuan, a year-on-year increase of + 21.92%; The net operating cash flow was 908 million yuan, a year-on-year increase of + 29.55%, and the efforts of cash collection were comprehensively increased to promote the benign growth of performance. Jinzhen oral liquid, Xingbei Zhike granule, ginkgo diterpene lactone glucosamine injection and other varieties have overcome the impact of the epidemic and achieved rapid growth. From the main treatment areas: cardio cerebrovascular, virus infection, gynecology and orthopedics + 29.02%, + 27.79%, + 7.99% and + 3.37% respectively. In the first quarter of 2022, the company achieved 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%.
Adhere to building strategic varieties. In 2021, Reduning injection will mainly restore the stock and gradually improve the coverage of adult departments on the basis of stabilizing Pediatrics; In view of the new stage of rising development of ginkgolide glucosamine injection, we comprehensively promoted the development of hospitals and the quantity of developed hospitals, basically realized the price for quantity, offset the impact of 70% price reduction in the national medical insurance negotiation in 2019, and its national negotiation price remained stable in 2021. Relying on the use principle of “986” and “1 + X”, the company selects six exclusive basic drug varieties (Jinzhen oral liquid, Yaobitong capsule, Xingbei Zhike granule, Guizhi Fuling Capsule, Compound Nanxing Zhitong ointment and Yinqiao Jiedu soft capsule) and Yixinshu tablets to form “seven basic drug varieties” and comprehensively develop seven basic drug varieties. In 2021, the overall operating revenue of the seven basic drugs reached + 31.06% year-on-year. The sales proportion of oral preparations represented by the seven basic drug varieties has gradually increased since 2018, reaching 56.61% in 2021, giving play to the company’s core advantages of multiple varieties, effectively improving the company’s sales structure and enhancing its ability to resist policy risks.
Chinese medicine innovation vanguard enterprise. The company adheres to innovation driven development, continues to be in the forefront of the innovation ability of the traditional Chinese medicine industry, takes the development of traditional Chinese medicine as the main body, and plans the coordinated development of chemical drugs, biological drugs and health products. In terms of traditional Chinese medicine: Yinqiao Qingre tablet, the first class 1.1 innovative traditional Chinese medicine since the implementation of the requirements for registration classification and application materials of traditional Chinese medicine on July 1, 2020, was approved for listing; Two clinical trials of traditional Chinese medicine, viyan granule and Jiuwei Shufeng Pingchuan Granule, were approved; 65 newly authorized invention patents; 2 production approval documents and 2 clinical licenses; Promote a batch of innovative drugs to enter phase I – III clinical stage one after another; Effectively promote the preclinical research of a batch of class 1.1 innovative drugs. We will continue to promote in-depth post marketing research on key varieties of medical insurance or basic drugs, carry out evidence-based medical clinical research on major varieties in an orderly manner, and conduct in-depth basic research on the functional components and action mechanism of relevant varieties. In addition, we will actively promote the preliminary preparations for the follow-up clinical trial of Guizhi Fuling Capsule for drug registration in the United States. Development of combination of imitation and innovation of chemical drugs: work in different clinical stages of multiple types of class 1 innovative drugs; Two generic drugs successfully passed the production site verification, and four generic drugs completed the declaration of production and conformity evaluation.
The effect of cost control is good. In 2021, the company’s sales expenses and management expenses were + 21.56% and + 5.72% year-on-year respectively; R & D expenses were 499 million yuan, up + 31.27% year-on-year, accounting for 13.69% of the company’s revenue (up + 1.14 PCT year-on-year). In 2021, the company’s gross profit margin and net profit margin were 71.91% (-0.93pct) and 8.89% (-0.15pct) respectively. The company’s sales expense rate, management expense rate and financial expense rate were 43.39%, 4.45% and 0.22% respectively.
OTC products of the company show a good development trend. During the reporting period, the company focused on the sales performance of large chain pharmacies; At the same time, focus on the construction of chain information direct connection system to ensure the healthy development of OTC business in the future.
[investment suggestions]
By the end of 2021, the company had obtained 203 drug production approvals, of which 43 drugs were exclusive varieties of traditional Chinese medicine and 3 protected varieties of traditional Chinese medicine. A total of 107 varieties of the company’s products have been listed in the 2021 national medical insurance catalogue, including 47 categories A, 60 categories B and 23 exclusive varieties; A total of 43 varieties have entered the national catalogue of essential drugs, including 6 exclusive varieties. In the “New Coronavirus pneumonia diagnosis and treatment plan (trial version ninth)”, the exclusive product of re drug injection is classified as a severe and dangerous confirmed case during the clinical treatment period. Huoxiang Zhengqi multi dosage form was listed as the recommended drug during the medical observation period.
The company has rich products, adheres to the strategy of large variety, increases innovation, and has achieved remarkable results. It has become the leader of traditional Chinese medicine innovation enterprises. We estimate that the operating revenue of the company in 2022, 2023 and 2024 will be RMB 4.278/5.081/6.058 billion respectively, the net profit attributable to the parent company will be RMB 462/6.23/814 million respectively, the EPS will be RMB 0.80/1.08/1.41 respectively, and the corresponding PE will be 20 / 15 / 11 times respectively. Give “overweight” rating.
[risk tips]
Industry policy risk;
Product R & D risk;
Product quality risk;
