\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 02 Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) )
Financial performance: 2022q1 revenue and net profit improved month on month
The company released the 2021 annual report and the first quarterly report of 2022. The revenue in 2021 was 2.55 billion yuan, a year-on-year decrease of 1.6%; The net profit attributable to the parent company was 210 million yuan, a year-on-year decrease of 69.3%; The net profit margin was 8.0%, a year-on-year decrease of 17.7pct. In a single quarter, the revenue of 2021q4 was 610 million yuan, a year-on-year increase of 3.8%; The revenue of 2022q1 was 750 million yuan, a year-on-year decrease of 1.2% and a month on month increase of 23.9% over 2021q4. In terms of net profit in a single quarter, the net profit attributable to the parent company in 2021q4 was - 1.37 million yuan, and the net profit attributable to the parent company in 2022q1 was 84.72 million yuan, a year-on-year decrease of 36.5% and a significant increase month on month.
Growth capacity: the contribution of cdmo is incremental, and the marginal improvement of API sector is expected in 2022
According to the company's annual report, "in 2021, the company successfully completed the R & D of mosadon's anti epidemic new drug emergency project. The company provided customers with services from R & D to commercialization in a very short time, which was further highly recognized and trusted by customers", Based on the revenue split caliber newly disclosed in the annual report, we expect that cdmo revenue accounts for a relatively high proportion of the revenue of "antiviral APIs and intermediates", driving the growth of cdmo business revenue. Looking forward to 20222024, we expect the growth of cdmo API and intermediate business of the company to come from: ① the clinical promotion or commercialization of cooperative projects (among which we expect the revenue share of MSD covid-19 drug project to decline); ② The number of new cooperation projects increased.
From the perspective of generic pharmaceutical raw materials and intermediates, the overall revenue growth was dragged down in 2021 (the revenue decreased by 21.2% year-on-year in 2021, accounting for 77.2%). We expect that the generic drug raw materials and intermediates in the annual report are mainly composed of blood pressure lowering (estimated revenue accounts for about 85-90%) and anti asthma (estimated revenue accounts for about 5-10%). In terms of sales volume, the total sales volume of generic APIs and intermediates in 2021 decreased by 12.3% ("the sales volume of APIs decreased slightly compared with last year, and the sales volume of intermediates decreased by 19.87% compared with the same period last year"), corresponding to a decrease of 10% in the average sales price. We believe that it can be confirmed from the side that the company's standard market revenue of SATA API grade intermediates accounts for a high proportion and the price is relatively stable. In addition, We are also concerned about the marginal changes of the company's generic API and intermediate business in 2021: ① the cooperation between large international pharmaceutical manufacturers, especially original pharmaceutical enterprises, continues to deepen（ "During the reporting period, the company's operating revenue from international large-scale preparation manufacturers was 1476153900 yuan, with a year-on-year increase of 19.81%, accounting for 58.00% of the company's operating revenue, including 272298100 yuan from cooperation with the original preparation company and 233820800 yuan in the same period of 2020, with a year-on-year increase of 16.46%); ② Accelerated registration of new products ("six new APIs have been added to carry out business promotion with original research customers, which are in the stages of registration verification, document submission, sample quality confirmation, etc. during the reporting period, the company obtained 8 API registered products approved by the State Drug Administration and 9 registered products under review and approval"). Looking forward to 20222024, we expect that the growth in the revenue of generic API and intermediate business will come from: ① the rise in the price of sartan in the non-standard market, but considering the relatively high proportion of the company's standard market revenue, we estimate that the overall price increase elasticity is limited; ② The procurement volume of international large preparation factories increased; ③ New API varieties gradually contribute to the increment. We suggest paying attention to the activation rhythm of FDA inspection and product registration.
In terms of preparation business (the revenue accounted for 0.2% in 2021), with the approval of new generic drugs and the deepening of OTC channel cooperation, we expect the preparation business to maintain a high growth rate from 2022 to 2024. Based on the company's API advantages in the field of cardiovascular and other chronic diseases, we are optimistic that the company's Chinese preparations will continue to expand under the approval.
Profitability: the capacity utilization rate is improved, and the net interest rate in 2022 may be increased quarter by quarter
In terms of gross profit margin, it decreased by 15 PCT year-on-year in 2021. In terms of sub sectors, we believe that the decline in gross profit margin mainly comes from the generic API and intermediate sector (the gross profit margin decreased by 18.7 PCT year-on-year in 2021). Specifically, it may come from the low capacity utilization of the new production base put into use (we estimate that the decline in intermediate self-sufficiency rate has a great impact on the company's sartan API and intermediate gross profit margin), as well as the rise in chemical prices Exchange and other factors. Looking forward to 20222024, we expect that with the improvement of capacity utilization in Shandong plant and the rise of the average price of sartan non-standard market, the gross profit margin of sartan APIs and intermediates is expected to increase significantly, and the gross profit margin of other varieties is basically stable. In terms of comprehensive gross profit margin, we expect the overall gross profit margin of the company to increase from 2022 to 2024. In terms of expense ratio, considering that the equity incentive expenses have decreased since 2022, the R & D expenses of preparations are still relatively high, and the sales expenses of generic drugs need to be continuously invested, we estimate that the net interest rate will increase quarter by quarter in 2022, and the increase rate of net interest rate will slow down from 2023 to 2024.
Viewpoint: large scale production and process optimization, from quantitative change to qualitative change
We believe that the company's technical capability in the field of large-scale production and process optimization has been laterally verified in the global competitiveness of sartan varieties. We believe that 2022 is a new starting point for the improvement of the company's profitability and the sales of new products (whether in the field of generic drugs or cdmo), and the launch of new production capacity (Jingsheng, Changyi, Sanyong, etc.) strengthens the scale advantage, Under the promotion of the new project ("based on the existing three APIs serving the original research, strive to promote the goal of 15-20 APIs serving the original research") to improve the turnover rate of fixed assets. The preparation business is expected to gradually reduce losses and contribute profits after the approval of new varieties. We continue to be optimistic about the company's advantages of large-scale production and process optimization to promote the iteration of C (d) Mo, API and preparation business from quantitative change to qualitative change.
Profit forecast and valuation
We expect that the company's EPS from 2022 to 2024 will be 1.15, 1.45 and 1.81 yuan / share respectively, and the closing price on April 22, 2022 corresponds to 28 times PE in 2022. During the capacity transition period, we are more optimistic that the company is at the starting point of the new business cycle. From 2022, with the reduction of cost side pressure, the net profit margin is expected to be gradually repaired. With the gradual increase of commercialization projects, C (d) Mo business is expected to continue to grow. Considering the development stage of the company and the valuation of comparable companies, maintain the "overweight" rating.
Risk tips
Production safety accidents and quality risks; Exchange rate fluctuation risk; Order delivery volatility risk; Risk of changes in pharmaceutical regulatory policies.
