\u3000\u Guangzhou Improve Medical Instruments Co.Ltd(300030) Cofco Biotechnology Co.Ltd(000930) 0009)
The net profit of non parent company in the first quarter of 20201 was + 3.33 billion yuan, with a year-on-year net profit of + 7.32 billion yuan and a year-on-year net profit of + 7.31 billion yuan, with a year-on-year net profit of + 7.31 billion yuan and a year-on-year net profit of + 1.02 billion yuan.
The performance slightly exceeded expectations. Under the adverse situation of 2022q1 epidemic disturbance, the company still achieved 38% performance growth, exceeding the previous expectation of the market. We judge that the rapid growth of the company’s performance is mainly driven by the core product growth hormone.
It is expected that growth hormone will maintain high growth and the growth momentum will be sufficient after the release of production capacity. According to the annual report data previously disclosed by the company, in 2021, the company achieved a revenue of 1.24 billion yuan from genetically engineered drugs, a year-on-year increase of + 45.43%. According to our model, most of the company’s genetic engineering drug revenue comes from growth hormone and a small part from interferon. It is estimated that the growth hormone revenue will exceed 1.1 billion yuan, a year-on-year increase of + 50%. The growth rate of the company’s profit side in 2022q1 is significantly higher than that of the revenue side. We judge that the growth hormone business probably continues the high growth rate in 2021.
According to the previous announcement of the company, the specifications of 6iu and 8iu of the company’s water injection have been approved in early August of 21, which has solved the problem of incomplete specifications. At the same time, the company’s growth hormone powder injection was approved in September to increase the indications of “idiopathic short stature”, which has made an important breakthrough. At present, the company’s growth hormone has been approved with 8 indications, the most among Chinese enterprises; Idiopathic short stature accounts for about 60% – 80% of all short stature children. We expect that the approval of the indication of idiopathic short stature will significantly improve the scope of the company’s growth hormone applicable population and drive the growth of sales. In addition, the production line with an annual output of 20 million recombinant human growth hormone was approved in March 22. After the release of production capacity, the company’s growth hormone is expected to usher in accelerated growth.
Other businesses are expected to be relatively stable, and the reform of subsidiaries is expected to be promoted. In 2021, the company accrued goodwill impairment for its subsidiaries SOHO Yiming and Sino German Meilian. We judged that SOHO Yiming and Sino German Meilian had not achieved accelerated performance in 2022q1; In addition, the proprietary Chinese medicine business (accounting for about 24% in 2021), which accounts for a relatively high proportion of income, is in a stable growth period, and equity incentives have been made in 21 years, which may reduce the shareholding proportion of the company, which may have an impact on the return to parent profits.
Foreign cooperation mRNA vaccine brings new highlights. On April 13, the company announced that it had signed the strategic cooperation framework agreement with Hefei afana Biotechnology Co., Ltd. to carry out exclusive cooperation in preclinical research, clinical research, industrialization and marketing of “covid-19 Omicron mutant mRNA vaccine” developed by afana. The project has completed pharmaceutical and pharmacodynamic research, and is conducting safety evaluation experiments. At present, it is sorting out the relevant materials of clinical trial application. In the near future, afana and the company will jointly submit the drug clinical trial application to the State Drug Administration.
Profit forecast: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 660 million, RMB 870 million and RMB 1.13 billion respectively, with the corresponding growth rate of 217.4%, 32.1% and 29.8%. The corresponding PE of the current stock price is 19 / 15 / 11x, maintaining the “buy” rating.
Risk warning: the promotion of new products is not as expected; Impairment of goodwill and intangible assets; Market competition intensifies risks; Risk of new drug research and development; There is a risk of sharp price reduction in the centralized purchase of growth hormone.
