\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 436 Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) )
Event:
1) the company released the annual report of 2021: the operating income, net profit attributable to the parent and net profit deducted from non attributable to the parent were RMB 8.022/24.31/2.406 billion respectively, with a year-on-year increase of + 23.20% / 45.46% / 51.40%; Net operating cash flow was 462 million yuan, a year-on-year increase of – 68.49%; EPS4. 03 yuan. It is proposed to distribute a cash dividend of 1.21 yuan (including tax) per share to all shareholders, with a dividend payment rate of 30.02%. The performance is in line with market expectations.
2) the company released the first quarterly report of 2022: the operating income, net profit attributable to the parent and net profit deducted from non attributable to the parent were 2.348/6.89/676 billion yuan respectively, with a year-on-year increase of + 17.30% / 21.93% / 20.78%; Operating net cash flow was 506 million yuan, a year-on-year increase of – 25.50%; EPS1. 14 yuan. The performance is in line with market expectations.
Comments:
4q21’s performance grew steadily and rapidly, and its online volume increased its profitability. From 2021q1 to Q4, the single quarter revenue was RMB 20.02/18.47/22.63/1.91 billion respectively, with a year-on-year increase of + 16.76% / 20.57% / 24.09% / 32.55%; The net profit attributable to the parent company was RMB 565 / 5.50 / 896 / 420 million, a year-on-year increase of + 20.84% / 38.54% / 93.08% / 22.60%; Deduct net profit not attributable to the parent company of RMB 560 / 555 / 891 / 400 million, with a year-on-year increase of + 21.02% / 40.32% / 92.51% / 49.18%. The company’s 4q21 business performance grew steadily and rapidly, and the annual profit growth was significantly faster than the revenue. The main reason was that the company expanded marketing channels, added online Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) pharmacy tmall flagship store and JD flagship store, and the direct sales proportion increased significantly, resulting in the improvement of profitability.
Implement the new strategy of “multi-core drive and two-way development”, and all businesses go hand in hand. In terms of products, 1) the revenue of liver disease drugs in 2021 increased from + 46% to 3.7 billion yuan year-on-year, with a significant acceleration, which is related to the growth of online channel sales; 2) The revenue of cardiovascular drugs in 2021 was 96 million yuan, which was mainly contributed by Angong Niuhuang Pill obtained by the company’s acquisition of 51% equity of longhui pharmaceutical in July 2020. The company began to distribute goods in the second quarter of 2021. With the help of Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) series of original channel networks, the company has rapidly increased its volume and can grow in the future; 3) In 2021, cosmetics and daily chemicals achieved a revenue of 841 million, with a year-on-year growth of – 7% and a year-on-year cost of – 22%. The decline in revenue is related to the change of revenue recognition method. It is preliminarily estimated that the net profit is + 39% year-on-year, which is estimated to be related to the decline in cost and the optimization of sales expenses. In particular, the oral care business achieved a significant growth in performance, with a net interest rate of more than 22%; 4) The food sector achieved a revenue of 45 million, a year-on-year increase of + 299%, with a good development momentum. The company implements the new strategy of “multi-core drive and two-way development”, that is, making Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , making daangong Niuhuang Pill and strengthening cosmetics; Endogenous epitaxial two wheel drive opens a new chapter in development.
The rate of sales and management expenses decreased, the investment in R & D was increased, and the operation quality was significantly improved. In 2021, the gross profit margin increased by 5.56pp to 50.72% year-on-year, and the net profit margin increased by 4.77pp to 30.72% year-on-year, reaching the highest level in recent five years. The annual sales expense rate decreased by 1.82pp to 8.11%, the management expense rate decreased by 0.45pp to 4.70%, and the R & D expense rate increased by 0.99pp to 2.49%. The decrease in the sales and management expense rate is estimated to be related to the increase in the proportion of online sales, and the doubling of the company’s R & D investment also reflects the determination to increase R & D. The net operating cash flow was 462 million yuan, a year-on-year increase of – 68%, mainly due to the increase of the company’s time deposits. The turnover rate of inventory and accounts receivable increased, the overall business situation of the company improved, and the revenue and expense sides were significantly optimized.
Both channel management and development, transformation and upgrading and salary incentive reform are worth looking forward to. In 2021, the company optimized the channel construction, developed its own online channels (tmall and JD flagship stores), launched the special retail business of guoyaotang, increased the amount of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) market, increased the supply of capsule dosage forms, strictly controlled the terminal price and adopted the limited sales mode to effectively hedge the malicious speculation and hoarding in the market. Actively explore the weak market in the north, with remarkable results. In 2021, the revenue of northeast, North and northwest regions increased by 40%, 58% and 87% respectively year-on-year. In terms of transformation and upgrading, in 2022, the company will accelerate the landing and subsequent layout of Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) famous medical centers, promote the spin off and listing of cosmetics companies, and speed up the pace of investment and M & A. Meanwhile, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) great health smart garden and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) health beauty garden projects are about to start, which will solve the capacity bottleneck of Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) series products and transform the production and operation to automation, digitization and intelligence. In addition, the company will carry out a pilot reform of the salary distribution incentive system in its subsidiaries to further improve the group’s control and profitability, which can be expected in the future.
1q22 the volume of Angong Niuhuang pills and food business increased rapidly, and the annual performance is expected to grow steadily. The revenue of liver disease drugs (mainly Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) Series) of 2022q1 company was 1.101 billion yuan, with a year-on-year increase of 19.70%, and the gross profit margin decreased by 0.82pp to 80.23% year-on-year. It is estimated that it is related to the increase in the cost of upstream raw materials and the decline in the proportion of online sales. Cardiovascular and cerebrovascular drugs (mainly Angong Niuhuang Pill) achieved a revenue of 66 million yuan in 2022q1. With the strategic attention and channel coordination of the company, we expect to exceed 200 million yuan this year. The food business achieved a revenue of 32 million yuan in 2022q1 and 45 million yuan in 2021. The diversified development of the company has achieved remarkable results. It is expected that with the multi-point spread of the epidemic and the appointment of the new board of directors, the annual performance will maintain steady growth.
Profit forecast, valuation and rating: Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) has a natural moat, has broad long-term development space, and the product price increases with the increase of purchasing power and the expectation of price increase, so it has the attribute of maintaining and increasing value. The company has continuously consolidated the foundation of the pharmaceutical manufacturing industry and implemented the new strategy of “multi-core drive and two-way development”, which has continuously improved the brand potential. Taking into account the multi-point spread of the epidemic and the lower than expected progress of price increase, the EPS from 2022 to 2023 was reduced to 4.84/5.82 yuan (10.7% / 15.8% lower than the previous forecast respectively), the EPS forecast for 2024 was increased to 7.03 yuan, and the current share price corresponds to 61 / 51 / 42 times of PE from 22 to 24 years, maintaining the “buy” rating.
Risk warning: the rise of raw material cost is higher than expected; Diversification progress is lower than expected Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) lozenge control exceeded expectations; The epidemic continues to affect sales outside China.
