\u3000\u30 China Baoan Group Co.Ltd(000009) 99 China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) )
Event:
China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) released the first quarterly report: in the first quarterly report of 2022, the company achieved an operating revenue of 4.194 billion yuan (+ 2.81%), a net profit attributable to the parent company of 839 million yuan (+ 30.45%), and a net profit not attributable to the parent company of 797 million yuan (+ 27.96%). The growth of the company’s sales revenue in the first quarter basically met expectations, and the profit growth exceeded expectations.
Key investment points:
Overcome the interference of Omicron epidemic and maintain revenue growth. In the first quarter of 2022, the company realized an operating revenue of 4.194 billion yuan (+ 2.81%), showing a steady growth trend. In terms of business, we expect that the CHC business of the company will still maintain a positive growth of about 5% – 10% in the first quarter, of which the subdivided fields such as pediatrics, Gastroenterology and skin will grow rapidly; In the prescription drug sector, as the implementation of the new national standard for traditional Chinese medicine formula particles affected the continuity of delivery, we expect the business to decline more in the first quarter, driving the overall decline of the prescription drug sector by about 10% – 20% in the first quarter. Looking forward to the whole year, we expect that with the gradual control of the epidemic situation & the normalization of delivery after the implementation of the new national standard of traditional Chinese medicine formula granules, the overall revenue of the company is expected to increase by 10%.
The cost structure continued to be optimized, and the growth of net profit attributable to the parent company exceeded expectations. In the first quarter of 2022, the company deducted 797 million yuan of non parent net profit, an increase of 27.96% year-on-year. The excess of profit growth over revenue growth is mainly due to the reduction of sales expense rate. The company’s sales expense ratio was 33.19% in the first quarter of 2021 and decreased to 23.23% in the first quarter of 2022, which promoted the net profit margin to increase by 4.28% (15.88% vs 20.16%). The reduction of the company’s sales expense rate mainly comes from two aspects: the proportion of CHC revenue is further increased, and the structure promotes the reduction of the company’s overall sales expense rate; The centralized collection of antibiotics in prescription drugs & the negative growth of traditional Chinese medicine formula particles led to the decline of the sales expense rate of prescription drug business.
Net operating cash flow increased significantly year-on-year. In the first quarter of 2022, the company’s net cash flow from operating activities reached 459 million yuan, an increase of 64.73% over 279 million yuan in the first quarter of 2021. The overall profit quality of the company is excellent.
According to the profit forecast and investment rating, the revenue in 2022 / 2023 / 2024 is expected to be 17.687 billion yuan / 20.172 billion yuan / 22.918 billion yuan, corresponding to the net profit attributable to the parent company of 2.380 billion yuan / 2.820 billion yuan / 3.285 billion yuan, and the corresponding PE is 14.07/11.87/10.19. Maintain the “buy” rating.
The risk prompt policy leads to the risk that the product price drops or the medical insurance payment level drops more than expected, the risk that the product sales promotion is less than expected, the risk that the R & D progress is less than expected, the risk that the M & A integration effect does not reach the expected, and the risk that the price of upstream raw materials rises more than expected.
