\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 57 Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) )
Event: on April 26, 2022, the company released 2021 annual report and 2022 first quarterly report. In 2021, the operating income was 808 million yuan, with a year-on-year increase of 26.95%; The net profit attributable to the parent company was 338 million yuan, a year-on-year increase of 21.38%; Net profit deducted from non parent company was 316 million yuan, with a year-on-year increase of 20.78%. In 2022q1, the total operating revenue was 198 million yuan, a year-on-year increase of 20%; The net profit attributable to the parent company was 92 million yuan, a year-on-year increase of 30.21%; Net profit deducted from non parent company was 77 million yuan, with a year-on-year increase of 27.68%.
The core variety of dust mite drops maintained a high increase of 20-30%. In 2021, the revenue of dust mite drops reached 796 million yuan (+ 26.14%), accounting for 98.55% of the revenue. Quarter by quarter, 21q4 achieved a revenue of 188 million yuan (+ 29.50%), and a net profit attributable to the parent company of 63.4 million yuan (+ 28.55%). 22q1 achieved a revenue of 198 million yuan (+ 20%) and a net profit attributable to the parent of 91.74 million yuan (+ 30.21%). Since 21q4, with the recovery of outpatient business activities and the company’s increase in product promotion, the sales business of dust mite drops has been fully restored.
Since 21q4, sales have fully recovered and R & D investment has increased rapidly. In 2021, the gross profit margin of the company’s overall business was 95.74% (+ 0.22pp), which continued to maintain a high gross profit level. The sales cost was 282 million yuan (+ 26.14%), and the sales rate was 34.93% (- 0.23pp). On the basis of the low base caused by the epidemic last year, the outpatient department gradually recovered and strengthened product promotion, so as to promote the growth of effective demand. The management fee is 51.86 million yuan (+ 44.40%), and the management rate is 6.42% (+ 0.78pp). The gradual recovery of business leads to the increase of labor remuneration and the amortization of intangible assets. The R & D cost is 87.93 million yuan (+ 35.53%), and the R & D rate is 10.89% (+ 0.69pp). R & D continues to grow rapidly. Financial rate – 2.74% (+ 0.90pp).
Consolidate the leading position of sublingual desensitization and actively expand stem cell / natural drug R & D projects. 1) Sublingual desensitization: at present, dust mite drops and Artemisia pollen drops are the exclusive varieties of the company. Among them, Artemisia annua powder is listed in 2021.2, which is expected to open the northern market, complement each other with the company’s core variety dust mite drops, and further develop the allergy treatment market. At the same time, the new indications of dust mite drops and the expansion of children’s groups with Artemisia annua powder have been steadily promoted. A series of pricking products are in phase III / application for listing, further consolidating the leading position of sublingual desensitization. 2) Stem cells / natural drugs: human hair follicle mesenchymal stem cells developed by Wuhan stem cells in early 22 have started to apply for clinical application, and the “kudingsaponin a solution for inhalation” of joint venture Kaiyi medicine is in phase I.
Profit forecast and investment suggestions: it is estimated that the operating revenue from 2022 to 2024 will be RMB 1.003 billion, 1.255 billion and 1.568 billion, with a year-on-year increase of 24.21%, 25.11% and 24.96%; The net profit attributable to the parent company was 413 million yuan, 485 million yuan and 614 million yuan, with a year-on-year increase of 22.05%, 17.61% and 26.57%. China has a large number of patients with allergic diseases and a large desensitization market space. The company is a leading enterprise with a market share of more than 80% in China. In 2021, a large variety of Artemisia annua powder drops was approved for listing and is expected to increase gradually, maintaining the “overweight” rating.
Risk warning: the academic promotion of dust mite drops is less than the expected risk; The promotion of Artemisia annua powder drops is less than the expected risk; Risk of drug bidding and price reduction; The risk of intensified competition for dust mite drops.
