\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 276 Jiangsu Hengrui Medicine Co.Ltd(600276) )
Performance review
On April 22, the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved a revenue of 25.906 billion yuan, a year-on-year decrease of 6.59%; The net profit attributable to the parent company was 4.53 billion yuan, a year-on-year decrease of 28.41%; The non net profit attributable to the parent deduction was 4.201 billion yuan, a year-on-year decrease of 29.53%. In the first quarter of 2022, the company achieved a revenue of 5.479 billion yuan, a year-on-year decrease of 20.93%; The net profit attributable to the parent company was 1.237 billion yuan, a year-on-year decrease of 17.35%; The non net profit attributable to the parent deduction was 1.180 billion yuan, a year-on-year decrease of 19.80%.
Business analysis
The impact of centralized mining continues. Since 2018, 28 varieties of the company have been included in the national centralized purchase, and the average price reduction of 18 selected varieties has been 73%. For the six drugs involved in the third batch of centralized purchase implemented since November 2020, the sales revenue was 1.9 billion yuan in 2020, down 55% in 2021; The sales revenue of the eight drugs involved in the fifth batch of centralized purchase implemented from September 2021 was 4.4 billion yuan in 2020, down 37% in 2021.
The negotiation price of national medical insurance decreased, and PD-1 income is expected to decline. The negotiation price of PD-1 carrelizumab decreased by about 85%, which will be implemented from March 1, 2021. In 2021, the sales volume of carrelizumab increased by 360.77%. It is expected that the price decline will lead to a certain decline in the sales revenue of carrelizumab.
Continue to increase R & D investment. In 2021, the company’s cumulative R & D investment reached 6.203 billion yuan, an increase of 1.214 billion yuan over the previous year, a year-on-year increase of 24.34%, and R & D investment accounted for 23.95% of sales revenue; Among them, the R & D expenses included in 2021 were 5.943 billion yuan, accounting for 22.94% of the sales revenue, an increase of 954 million yuan over the previous year. The company’s R & D investment and R & D expenses reached a record high, affecting the current profit, but providing strong support for the company’s long-term development.
The innovative drug pipeline will gradually enter the large-scale cycle. In 2021, the company’s three innovative drugs haitripopa ethanolamine, darcilil hydroxyethanesulfonate and proline hengglijing were approved for listing for the first time, and six indications of five drugs have been applied for NDA. It is expected that the company’s innovative drug pipeline will gradually enter a large-scale cycle.
Profit adjustment and investment suggestions
Considering the continuous increase of R & D investment and the continuous impact of centralized procurement and medical insurance, we lowered the company’s profit forecast for 20222023 (down 36% / 36% respectively). It is estimated that the net profit attributable to the parent company from 20222024 will be 4.8/52/6 billion yuan, corresponding to 44 / 40 / 35 times of PE from 20222024, maintaining the “buy” rating.
Risk tips
Intensified competition leads to lower than expected sales risks, lower than expected risks in centralized purchase and medical insurance negotiation, lower than expected risks in innovative drug research and development, lower than expected risks in internationalization process, loss of core personnel, etc.
