\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 02 Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) )
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the operating revenue was 2.545 billion yuan, a year-on-year decrease of 1.64%, the net profit attributable to the parent was 205 million yuan, a year-on-year decrease of 69.32%, and the non net profit deducted was 161 million yuan, a year-on-year decrease of 72.85%; In 2022q1, the operating revenue was 750 million yuan, a year-on-year decrease of 1.19%, the net profit attributable to the parent was 84.72 million yuan, a year-on-year decrease of 36.52%, and the non net profit deducted was 66.95 million yuan, a year-on-year decrease of 49.83%.
The performance is expected to turn upward, and the new varieties of cdmo and API are expected to grow rapidly. The revenue side remained stable, of which cdmo achieved 557 million yuan (year-on-year + 552.65%, the same below), accounting for 21.90%, showing a bright performance. The profit side is affected by the decline in the price stage, the rise in the price of raw materials and the insufficient self supply of intermediates; As well as the impact of R & D investment, equity incentive expenses and exchange losses on the expense side, the performance is under pressure in the short term. Among them, the exchange loss was 105777 million yuan, the management expense was 436 million yuan (+ 18.21%), and the R & D expense was 227 million yuan (+ 26.99%). The apparent performance of 2022q1 is affected by the high base of product prices last year; However, the gross profit margin of Q1 was 33.51%, up 1.06% month on month, showing a recovery trend. We believe that the prices of sartan API and intermediates have rebounded, with the gradual release of the production capacity of key intermediates; With the rapid growth of cdmo, Q2 is expected to usher in a performance inflection point.
Sub business: API gradually recovered, cdmo continued to work, and preparations began to harvest.
Cdmo projects: accelerate the commercialization and maintain the rapid growth of cdmo projects. While deepening the cooperation with large pharmaceutical enterprises such as Merk, the first three communist parties and Wutian, the company further carried out cooperation with small and medium-sized new drug R & D companies. 21h1 disclosed that 11 products have been commercialized and 13 products need to be commercialized. We expect that with the continuous volume of commercial products, the company’s cdmo business is expected to continue to grow rapidly.
API and intermediates: continue to promote cooperation with global multinational pharmaceutical enterprises and original research, and the development of new varieties is worth looking forward to. In 2021, the revenue of generic API and intermediates was 1.964 billion yuan (year-on-year – 21.20%, the same below), and the gross profit margin was 32.54% (- 19.13pp). The sales volume was 3157 tons (- 12.33%), of which the sales volume of API decreased slightly, and the sales volume of intermediates was – 19.87% year-on-year. The decline of income and gross profit margin is mainly affected by price and cost side: 1) short-term fluctuation of sartan price; 2) The relocation of intermediates affects self supply and export; 3) Rising cost of bulk raw materials; 4) RMB appreciation. With the rise of price 21q4 and the completion of relocation, sartan is expected to see the improvement of both volume and price in 2022; New API varieties are worth looking forward to.
Preparation: the variety of products is constantly enriched and the harvest is imminent. Irbesartan tablets, the first product approved in 2021, achieved a revenue of 3.9736 million yuan. In 2022, olmesartan axetil tablets, olmesartan axetil hydrochlorothiazide tablets, irbesartan hydrochlorothiazide tablets and other products were successively approved, and the categories were constantly enriched. As of the 2021 annual report, the company has applied for 14 product regulations to be approved and 71 product regulations under research.
Expense rate: the gross profit margin began to recover, the R & D investment continued to grow, and the equity incentive expenses and exchange were disturbed. Gross profit margin: the gross profit margin in 2021 was 36.65% (- 15pp), mainly affected by the price and cost side of API and intermediates. The gross profit margin in 2022q1 was 33.51%, up 1.06pp month on month. With the reduction of some influencing factors, it has begun to recover, and it is expected to recover quarterly throughout the year. Expense ratio: in 2021, the sales expense ratio is 1.27% (- 0.02pp), the management expense ratio is 17.11% (+ 2.87pp), and the financial expense ratio is 0.71% (- 0.75pp). The increase in the rate of administrative expenses was about 3PP, mainly due to employee compensation, environmental protection expenses and equity incentive expenses. In 2022q1, the sales expense rate was 1.28% (+ 0.06pp), the management expense rate was 13.30% (+ 0.24pp), and the financial expense rate was 1.04% (+ 0.34pp), which remained basically stable. R & D Investment: in 2021, the company’s R & D expenditure was 227 million yuan (+ 26.99%), accounting for 8.94% of revenue, and in 2022q1, the R & D expenditure was 50.8 million yuan (+ 8.13%), accounting for 6.77% of revenue. The company accelerated the transformation and upgrading of API and preparation integration, accelerated the R & D investment of preparation projects, and the R & D expenditure continued to grow.
Profit forecast and investment suggestions: according to the first quarterly report of the annual report, we adjusted the profit forecast. It is estimated that the operating revenue of the company from 2022 to 2024 will be 3.231, 3.837 and 4.551 billion yuan (3.330 and 3.869 billion yuan before the adjustment in 2022 and 2023), with a year-on-year increase of 26.95%, 18.76% and 18.61%; The net profit attributable to the parent company was 461 million yuan, 590 million yuan and 748 million yuan (578 million yuan and 755 million yuan before the adjustment in 2022 and 2023), with a year-on-year increase of 125.22%, 27.91% and 26.84%. The current share price corresponds to 26 / 20 / 16 times PE from 2022 to 2024. In 2021, the performance is under short-term pressure, but the API new products, cdmo and preparation business laid out in the early stage are expected to reap harvest one after another. The new business can take off and maintain the “buy” rating.
Risk warning events: environmental protection risk, quality risk, price fluctuation risk of API and intermediate, loss of research and development of new drugs
