\u3000\u3 Shengda Resources Co.Ltd(000603) 707 Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) )
Key investment points
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the operating revenue was 3.687 billion yuan, a year-on-year increase of 26.48%, the net profit attributable to the parent was 1.059 billion yuan, a year-on-year increase of 31.41%, and the non net profit deducted was 1.024 billion yuan, a year-on-year increase of 33.47%; In the first quarter of 2022, the operating revenue was 1.177 billion yuan, a year-on-year increase of 33.24%, the net profit attributable to the parent company was 330 million yuan, a year-on-year increase of 20.96%, and the non net profit deducted was 326 million yuan, a year-on-year increase of 23.67%.
The performance is bright, the overseas preparations continue to be in large quantities, and the operating cash flow continues to be positive. In 2021, the company's performance continued to maintain a strong growth of more than 30%, the rapid growth driven by preparations, and the heparin API remained stable. At the same time, when the inventory is stable (RMB 4.778 billion in the first three quarters of 2021 and RMB 4.894 billion in the annual report), the rapid expansion of preparation sales has greatly improved the cash flow. In 2021, the net operating cash flow was RMB 684 million, continuing the positive trend of the third quarterly report. By quarter, the revenue of 2021q4 was 907 million yuan (+ 19.84%), the net profit attributable to the parent company was 215 million yuan (+ 11.19%), and the non net profit deducted was 201 million yuan (+ 13.55%); In 2022q1, the revenue was 1.177 billion yuan (+ 33.24%), the net profit attributable to the parent company was 330 million yuan (+ 20.96%), and the non net profit deducted was 326 million yuan (+ 23.67%). The revenue side of Q1 continues to grow steadily, and the profit side is expected to be slightly disturbed by logistics and transportation.
Sub business: the revenue of heparin API is stable, the preparation is growing rapidly, and cdmo expects to reap: 1) heparin API: the revenue in 2021 is 1.428 billion yuan (+ 9.47%), the sales volume is increased by 10.21% year-on-year, and the price is expected to remain stable. The gross profit margin was 52.33% (-3.81pp), mainly due to the rise in the price of crude heparin. 2) Preparation: in 2021, the revenue was 2.130 billion yuan (+ 44.52%), and the gross profit margin was 59.85% (- 4.04pp). China's preparation revenue is expected to increase by about 25% year-on-year. In 2021, the company obtained the national drug registration approvals for baixiaoan injection, bendamostine hydrochloride injection, milrinone injection and fondaparinux sodium injection and fully launched sales. We expect the revenue of overseas preparations to increase by about 60% year-on-year, of which the revenue of meitheal, a subsidiary, is 1.041 billion yuan, a year-on-year increase of more than 50%. Some of the company's preparation products have a relatively stable market share in the U.S. market, such as cisatracurium benzenesulfonate, which accounts for nearly 30% in the U.S. market, and bleomycin and gemcitabine account for about 20%. Varieties: the global sales of standard and low molecular weight heparin preparations exceeded 90 million in 2021, with a year-on-year increase of more than 60%; In addition to heparin, nearly 30 sterile injections have been approved by FDA. The overall gross profit margin of the preparation is expected to decline slightly, mainly because the company's preparation is sold in Europe, and the price of the preparation in Europe is lower than that in the United States. 3) Cdmo's revenue in 2021 was 123 million yuan (- 7.24%), and its gross profit margin was 53.50% (+ 21.04pp). The gross profit margin increased significantly. We expect that the scale effect will appear mainly due to the improvement of capacity utilization.
Expense rate: transportation cost, raw material cost and preparation confirmation caliber affect the gross profit rate, and the gross profit amount keeps increasing; The increase of income leads to the decrease of expense rate. Gross profit margin: the gross profit margin of 2021 and 2022q1 are 56.71% (- 2.25pp) and 50.49% (- 7.07pp) respectively. The decrease of gross profit margin is mainly due to 1) the increase of transportation cost caused by the rapid growth of overseas preparations; 2) In the price rise of crude heparin products, the confirmation of the moving average of inventory brought about an upward cost; 3) Due to the changes of sales modes such as centralized purchase in China, the gross profit margin changes due to the recognition method of preparation revenue. Expense rate: the three expense rates of 2021 and 2022q1 are 18.41% (- 5.30pp) and 12.17% (- 5.79pp) respectively. Although the increase of preparation sales has increased the travel promotion fee and management salary, the rapid growth of income has reduced the expense rate. R & D Investment: in 2021 and 2022q1, the R & D expenses of the company were 221 million yuan (+ 17.82%) and 53.46 million yuan (+ 57.65%) respectively, accounting for 5.99% (- 0.44pp) and 4.54% (+ 0.70pp) respectively. The R & D investment continued to grow and the proportion remained stable.
Profit forecast and investment suggestions: according to the latest announcement data, considering the continuous development of the company's preparation business and the impact of costs, we fine tune the profit forecast. It is estimated that the company's revenue from 2022 to 2024 will be 4.647 billion yuan, 5.814 billion yuan and 7.163 billion yuan (4.872 billion yuan and 6.068 billion yuan before the adjustment in 2022 and 2023), with a year-on-year increase of 26.05%, 25.11% and 23.21%; The net profit attributable to the parent company was 1.331 billion yuan, 1.743 billion yuan and 2.291 billion yuan (1.457 billion yuan and 1.916 billion yuan before adjustment in 2022 and 2023), with a year-on-year increase of 25.66%, 30.93% and 31.45%. The current share price corresponds to PE 24 / 18 / 14 from 2022 to 2024. Considering that the company's overseas injection new products continue to accelerate the approval and continuous volume, the biological drug cdmo business is expected to gradually harvest, continuously open the growth ceiling and maintain the "buy" rating.
Risk warning event: the risk of narrowing the price gap between raw materials and APIs; Risk of inventory falling price; The risk that anda is not approved as expected; There is a risk that the public information is delayed or not updated in time.
