\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 276 Jiangsu Hengrui Medicine Co.Ltd(600276) )
Event: the company released its annual report for 2021, realizing an operating revenue of 25.906 billion yuan (- 6.59%), a net profit attributable to shareholders of listed companies of 4.53 billion yuan (- 28.41%), and a net profit attributable to shareholders of listed companies of 4.210 billion yuan (- 29.53%) after deduction. At the same time, the quarterly report for the first quarter of 2022 was released, realizing an operating revenue of 5.479 billion yuan (- 20.93%), a net profit attributable to the parent company of 12.37 (- 17.35%), and a net profit attributable to the shareholders of the listed company of 1.180 billion yuan (- 19.80%) after deducting non profits
Centralized purchase and price reduction negotiation of PD-1 monoclonal antibody drag down performance, and the revenue structure is expected to be gradually optimized. The company’s revenue declined in 2021. On the one hand, due to the impact of centralized purchase, the sales revenue of the third batch of drugs involved in centralized purchase, which began in November 2020, was 1.9 billion yuan in 2020, down 55% in 2021; For the eight drugs involved in the fifth batch of centralized purchase, which began in September 2021, the sales revenue was 4.4 billion yuan in 2020, a decrease of 37% in 2021 (iodixanol in key varieties failed to win the bid, and the price of shunatracurium decreased significantly). On the other hand, carrelizumab reduced its price by 85% and entered the medical insurance at the end of 2020. Although the sales volume increased significantly (+ 361%), the income decreased year-on-year due to factors such as difficulty in entering the hospital and different implementation cycles of medical insurance. In 2021, other key innovative drugs of the company performed well. The sales volume of pyrroltinib increased by 22.85% year-on-year, and that of tiopefitin increased by 37.51% year-on-year. The company disclosed in the mid-2021 report that the proportion of innovative drug revenue has reached 39.15%. In 2021, haitripopa, hengglijing and darcilil were approved for listing, and the number of listed innovative drugs increased to 10; Haitripopa, remazolam and fluzopari have entered the medical insurance for the first time, the new indications of apatinib (2lhcc) have been included in the medical insurance, and the contracts of pyrroltinib and tiopefitin have been successfully renewed. We believe that with the large-scale volume of several innovative drugs in the company, the proportion of innovative drug revenue is expected to continue to increase in the future and the revenue structure will be further optimized.
Adhere to high-intensity R & D investment, and many innovative drugs have entered the late stage of clinical practice. In 2021, under the pressure of performance, the company still increased its R & D investment, which was 6.203 billion yuan (+ 24.34%). In the first quarter of 2022, the company’s R & D investment totaled about 1.457 billion yuan (expensed 1.007 billion yuan + capitalized about 450 million yuan), accounting for more than 26% of revenue, and continued to maintain high-intensity R & D investment. In China, shr-1316 (PD-L1 monoclonal antibody, submitted to NDA), shr3680 (AR inhibitor, submitted to NDA), repagliptin (DPP-4 inhibitor, submitted to NDA), shr8008 (CYP51, submitted to NDA), shr-1701 (clinical phase III), famitinib (clinical phase III), shr-1314 (IL-17A monoclonal antibody, clinical phase III), shr4640 (URAT1 inhibitor, clinical phase III), shr0302 (Jak1 inhibitor, clinical phase III), shr-1209 (psck9 monoclonal antibody, clinical phase III) Many varieties such as shr8554 (MOR, clinical phase III), shr0410 (KOR, clinical phase III), shr7270 (GnRH, clinical phase III), ophthalmic drugs (shr8058 and shr8028, clinical phase III) have entered the late stage of R & D, which is expected to become a new growth driver of the company’s performance. Overseas, the company strengthened the construction of overseas clinical team. In 2021, the company added more than 100 overseas clinical R & D talents, which changed the previous mode of overseas clinical R & D with the help of cro, and significantly improved the efficiency and quality of international clinical research. At the same time, the company selected varieties with differentiated clinical advantages and focused on promotion. Among them, many pipelines such as carrelizumab + apatinib first-line treatment of liver cancer entered clinical phase III.
Optimize the sales system and improve the operation efficiency. In 2021, the company reduced the number of sales personnel from 17138 at the beginning of the year to 13208, further reducing the sales and operation cost, improving the sales and operation efficiency and increasing the per capita unit yield; At the same time, the functions of sales operation, marketing finance and support departments were integrated. By the end of 2021, the number of financial and administrative personnel had decreased year-on-year.
Profit forecast and Valuation: most of the company’s large generic drugs in stock have been included in centralized purchase, and the impact on the company’s performance will be concentrated from 2021 to 2022. In the future, the negative impact of centralized purchase on the company’s performance will decrease marginally. We believe that with the increase in the number and volume of innovative drugs listed by the company, the proportion of innovative drug revenue will continue to increase and the revenue structure will continue to be optimized. It is estimated that the company’s revenue from 2022 to 2024 will be 26.750 billion yuan, 30.027 billion yuan and 33.717 billion yuan respectively, with a year-on-year growth rate of 3.3%, 12.3% and 12.3%; The net profit attributable to the parent company was RMB 4.659 billion, RMB 5.321 billion and RMB 6.140 billion respectively, with a year-on-year growth rate of 2.8%, 14.2% and 15.4%. Based on the closing price on April 25, the corresponding PE was 40.8, 35.7 and 30.9 times respectively, maintaining the “buy” rating.
Risk tip: the volume of innovative drugs is lower than expected; The epidemic situation has a great negative impact on drug sales; Overseas listing of innovative drugs was blocked.
