\u3000\u30 Zhongyan Technology Co.Ltd(003001) 81 Zhejiang Jolly Pharmaceutical Co.Ltd(300181) )
Event:
The company released its annual report for 2021. The operating revenue of the company during the year was 1.457 billion yuan, a year-on-year increase of 33.60%. The net profit attributable to shareholders of listed companies was 179 million yuan, a year-on-year increase of 102.03%. The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 173 million yuan, a year-on-year increase of 106.37%. The basic earnings per share is 0.2948 yuan. It is proposed to distribute a cash dividend of RMB 2.00 (including tax) to all shareholders for every 10 shares.
The company released the first quarter report of 2022. The operating revenue in the first quarter was 439 million yuan, a year-on-year increase of 29.18%. The net profit attributable to the shareholders of the listed company was 687467 million yuan, a year-on-year increase of 56.97%. The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 674244 million yuan, a year-on-year increase of 55.77%. The basic earnings per share is 0.113 yuan.
Analysis and comments
Gross profit margin increased significantly, with a bright quarterly growth. In 2021, the company’s overall gross profit margin was 71.43%, a year-on-year increase of + 3.54 percentage points; The expense rate during the period was 58.26%, with a year-on-year increase of -1.05 percentage points; Among them, the sales expense rate was 48.61%, with a year-on-year increase of + 1.17 percentage points; The management expense rate was 9.02%, with a year-on-year increase of -1.43 percentage points; The financial expense rate was 0.63%, with a year-on-year increase of -0.78 percentage points; The net operating cash flow was 252 million yuan, a year-on-year increase of – 9.97%.
Quarterly in 2021, the company’s Q1-Q4 single quarter revenue was 340, 358, 381 and 379 million yuan respectively, with year-on-year growth rates of + 76.07, + 30.67, + 25.77 and + 17.93% respectively. The Q1-Q4 single quarter net profit attributable to the parent company was 44, 43, 45 and 48 million yuan respectively, with year-on-year growth rates of + 300.98, + 116.16, + 41.98 and + 81.18% respectively. The Q1-Q4 single quarter net profit deducted from non attributable to the parent company was 43, 39, 44 and 46 million yuan respectively, with year-on-year growth rates of + 30654 and +110.19、+46.08、+91.23%。
Wuling and bailing series are growing at a high speed, and the price reduction of centralized mining is limited. We look forward to continued volume in the future. In terms of products, part of the revenue of Wuling series was 850 million yuan, with a year-on-year growth rate of + 40.22%; The gross profit margin was 87.48%, with a year-on-year increase of 4.48 percentage points. The revenue of Bailing film series was 265 million yuan, with a year-on-year growth rate of + 24.28%; The gross profit margin was 78.72%, basically flat. Part of the revenue of traditional Chinese medicine decoction pieces series was 289 million yuan, with a year-on-year growth rate of + 25.53%; The gross profit margin was 20.39%, with a year-on-year increase of 0.49 percentage points. The revenue of traditional Chinese medicine granules was RMB 3.1 billion, with a year-on-year growth rate of + 4.4%. Among them, the core product Wuling capsule (converted into 36 capsules) sold 232077 million boxes in 2021, with a year-on-year increase of 32.52%. Bailing tablets (converted into 30 pieces) sold 131024 million boxes in 2021, with a year-on-year increase of 25.05%.
In April 2022, during the centralized collection of Chinese patent medicines in Guangdong Province, the company’s products Wuling capsule and bailing tablet of Everest pharmaceutical industry are to be selected, and the decline is relatively limited. Wuling capsule and bailing tablet are products of the national basic drug catalogue. In 2021, the sales volume of Wuling capsule in the six provinces (regions) covered by the inter provincial alliance accounted for 22.45% of the national sales volume, and bailing tablet in the three provinces (Guangdong, Hainan and Qinghai) involved in the reporting volume of the inter provincial alliance accounted for 8.35% of the national sales volume in 2021. The selection of Wuling capsule and bailing tablets in this centralized collection has consolidated the market share of the region where Guangdong alliance is located. Although the sales price has been reduced, it is conducive to reducing the drug burden of patients and improving the accessibility of drugs.
The advantages of exclusive products are prominent. Focusing on the extended development strategy of Wuling mushroom powder, the company has built a product line with independent intellectual property rights. Wuling capsule, Lingze tablet and linglianhua granule are exclusive products. Wuling capsule is a class I new drug and protected variety of traditional Chinese medicine, and has a good market development foundation. Linglianhua Granule “pharmaceutical preparation for treating women’s climacteric syndrome and its preparation method” and Lingze tablet “pharmaceutical composition for treating prostatitis and benign prostatic hyperplasia and its preparation method and preparation” have obtained national invention patents; Linglianhua granule is a national second-class protected variety of traditional Chinese medicine. Wuling capsule, Lingze tablet and bailing tablet have all entered the national catalogue of essential drugs (2018 Edition) and the national catalogue of medical insurance (2021 Edition).
Traditional Chinese medicine decoction pieces and traditional Chinese medicine formula granules company continued to layout. Decoction pieces of traditional Chinese medicine: the holding subsidiary of zolibacao traditional Chinese medicine has more than 1500 product specifications of decoction pieces of traditional Chinese medicine, including Poria cocos, Astragalus membranaceus, fried Atractylodes macrocephala with bran, Angelica sinensis, bran white peony, Salvia miltiorrhiza, tangerine peel, Rehmannia glutinosa and other varieties, as well as direct oral decoction pieces of Panax Notoginseng Powder, Chuanbei powder, broken wall Ganoderma lucidum spore powder, etc. Formula granules: since the company obtained the special scientific research enterprise of traditional Chinese medicine formula granules in Zhejiang Province, the company has focused on advanced production technology and high quality standards. At present, the company has more than 600 varieties of traditional Chinese medicine formula granules on record.
The variety development echelon is clear. With Wuling series, bailing tablets, decoction pieces of traditional Chinese medicine and formula particles as the core, vigorously expand and serve the grass-roots market, give full play to the role of modern traditional Chinese medicine in the prevention and treatment of chronic diseases, strive to build Wuling series into 2 billion, bailing tablets into 1 billion, Decoction pieces of traditional Chinese medicine and formula particles into 1 billion large varieties, and focus on cultivating polycarbofel calcium tablets as new potential varieties; At the same time, through extensive M & A, R & D and innovation, enrich the variety line, and introduce strategic partners to jointly help the development of the company.
Investment advice
Due to the update of the company’s annual report, the previous profit forecast was adjusted. We expect that the company’s revenue from 2022 to 2024 will be RMB 1.91/24.9/3.25 billion respectively, with a year-on-year increase of 31.2% / 30.1% / 30.8%, the net profit attributable to the parent company will be RMB 260 / 34.4/440 million respectively, with a year-on-year increase of 43.6% / 31.2% / 31.3%, the corresponding EPS will be RMB 0.42/0.56/0.73, and the corresponding valuation will be 20x / 15x / 11x. Maintain the “buy” investment rating.
Risk tips
Marketing expansion is less than expected; Large variety dependence risk; The impact of centralized mining exceeded expectations, etc.
