\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 57 Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) )
The performance in 2021 was in line with expectations, and the performance in 2022q1 exceeded expectations. In 2021, the revenue was RMB 808 million, with a year-on-year increase of 26.95%, the net profit attributable to the parent was RMB 338 million, with a year-on-year increase of 21.38%, the net profit deducted from non attributable to the parent was RMB 316 million, with a year-on-year increase of 20.78%, and the net cash flow from operating activities was RMB 361 million, with a year-on-year increase of 40.73%.
In 2021q4, the revenue was 188 million yuan, a year-on-year increase of 29.5%, the net profit attributable to the parent was 63 million yuan, a year-on-year increase of 28.55%, and the net profit deducted from non attributable to the parent was 57 million yuan, a year-on-year increase of 34.23%. In 2022q1, the revenue was 198 million yuan, a year-on-year increase of 20%, the net profit attributable to the parent was 92 million yuan, a year-on-year increase of 30.21%, and the net profit deducted from non attributable to the parent was 77 million yuan, a year-on-year increase of 27.68%.
Dust mite drops recovered strongly, and Artemisia annua powder drops achieved commercial sales. In 2021, the sales revenue of dust mite drops was 796 million yuan, with a year-on-year increase of 26.15% and a gross profit margin of 96.09%, which remained at a high level. The sales volume was 9.16 million pieces, with a year-on-year increase of 27.27%. The company expects the growth rate of new diseases in 2021 to be more than 30%. Artemisia annua powder drops obtained the production approval at the beginning of 2021, basically completed the national bidding network by the end of the year, and achieved an income of 3.67 million yuan in 2021. In 2021, the revenue of prick kit was 4.78 million yuan, a year-on-year increase of 98.34%, and the sales volume was 13800 pieces, a year-on-year increase of 33.41%.
The profitability is strong, and the gross profit margin remains above 95%. In 2021, the overall gross profit margin of the company reached 95.74%, of which the gross profit margin of dust mite drops was 96.09%. The gross profit margin of Artemisia annua powder drops was higher than that of dust mite drops, and the gross profit margin of pricking kit was expected to be around 90%. In 2021, the net interest rate of the company was 40.4%, and that of 2022q1 was 45.03%, which further increased. The sales expense rate, management expense rate and financial expense rate of 2022q1 company are 33.94%, 19.1% and – 2.87% respectively, with year-on-year changes of -3.18pct, -0.15pct and 0.21pct.
The R & D investment has been increased and the R & D pipeline has been continuously fulfilled. In 2021, the company invested 102 million yuan in R & D, with a year-on-year increase of 29.11%, accounting for 12.63%, including 51 million yuan in stem cell R & D and 11 million yuan in natural drug R & D. In 2022q1, the R & D cost was 27 million yuan, a year-on-year increase of 33.25%. The company’s drug supplement application for children’s indications of Artemisia powder drops was officially accepted, the children’s rhinitis indications of Artemisia powder drops were obtained the summary report of phase III clinical trial, and the listing applications of “Artemisia pollen pricking solution”, “birch pollen pricking solution”, “allergen skin pricking test control solution” and “Humulus pollen pricking solution” for allergen skin pricking test were officially accepted. The therapeutic drug of human hair follicle mesenchymal stem cells developed by Wuhan stem cells has obtained the quality review and inspection report of China food and Drug Control Institute, and the inspection results are qualified. The filing of the drug and the formal declaration of clinical research have been started. A clinical trial of kudingsaponin a solution for inhalation is being carried out by the associated company Kaiyi medicine.
Profit forecast and investment rating: it is estimated that the company’s revenue from 2022 to 2024 will be RMB 1.026 billion, 1.318 billion and 1.692 billion, with a year-on-year increase of 27%, 28.4% and 28.4%. The net profit attributable to the parent company will be RMB 415 million, 535 million and 689 million respectively, with a year-on-year increase of 22.9%, 28.8% and 28.8%, and the corresponding PE will be 40.35, 31.31 and 24.31 times respectively. Considering that the company’s dust mite drops are in the high-volume period and Artemisia powder drops are in the stage of academic promotion, they are covered for the first time, so they are given a buy rating.
Stock price catalyst: the growth rate of new cases of dust mite drops has reached more than 30%; The sales of Artemisia annua powder drops exceeded expectations.
Risk factors: the risk of bidding price reduction, the high gross profit margin of products, the continuous growth of performance, the concentration of leading products and the failure of new drug development.
