\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 57 Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) )
Event:
Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) released the annual report of 2021 and the first quarterly report of 2022: in 2021, the company achieved an operating revenue of 807 million yuan, 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%. In the first quarter of 2022, the company achieved a revenue of 197 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%.
Key investment points:
In 2021, the performance grew steadily and performed well in the fourth quarter. In 2021, the company achieved an operating revenue of 807 million yuan, 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%. Among them, the sales revenue of dust mite drops was 796 million yuan, and the sales revenue of Artemisia pollen allergen sublingual drops was 3.67 million yuan. In 2021, the company’s gross profit margin was 95.74%, with a year-on-year increase of 0.23 percentage points; The net interest rate was 40.40%, a year-on-year decrease of 2 percentage points, mainly due to the increase in administrative expenses and R & D expenses. In 2021, the company’s sales expense rate / management expense rate / R & D expense rate was 34.93% / 6.42% / 10.89%, with a year-on-year increase of (- 0.22) / 0.77/0.69 percentage points respectively, which was mainly due to the increase in employee compensation and amortization of intangible assets during the reporting period, while the investment in original R & D projects continued to increase. Quarter by quarter, 2021q1 / Q2 / Q3 / Q4 achieved revenue of RMB 165 / 183 / 272 / 188 million respectively, with a year-on-year increase of 49.31% / 22.66% / 17.48% / 29.50% respectively; The gross profit margin is 95.77% / 95.56% / 96.17% / 95.24%, and the net profit margin is 41.13% / 40.65% / 45.64% / 31.92% respectively.
Strong regions maintained high growth, while weak regions moved forward steadily. By region, South China / East China / Central China / other regions achieved sales revenue of RMB 282 / 2.62 / 146 / 117 million respectively in 2021, with a year-on-year increase of 21.72% / 31.34% / 37.79% / 18.74% respectively. From the perspective of sales areas, the growth of dust mite drops in advantageous areas such as Guangdong, Jiangsu and Zhejiang is still rapid. We believe that this is the result of early accumulation and medium-term release. On the basis of early academic promotion and market cultivation, the advantageous areas can provide continuous driving force for subsequent performance growth, and the newly developed areas will gradually contribute to the increment and lay the foundation for performance growth.? Artemisia pollen allergen sublingual drops began to contribute to sales in 2021, and we look forward to the follow-up. Artemisia annua was sold in the middle of 2021, with a sales revenue of 3.67 million yuan in 2021. It is expected that with the development of academic promotion and market cultivation of the company, Artemisia annua pollen allergen sublingual drops are expected to become the second growth power of the company. According to the company’s announcement, the sublingual drops of Artemisia pollen allergen have completed the network hanging work in more than 20 provinces (including municipalities directly under the central government).
In the first quarter of 2022, new cases increased rapidly, the sales expense rate decreased, and the net interest rate increased year-on-year. In 2022q1, the company achieved a revenue of 197 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%. The year-on-year growth rate of new patients in the first quarter was high, which contributed to the performance of the first quarter and the whole year. The gross profit margin of 2022q1 company was 95.85%, with a year-on-year increase of 0.08 percentage points; The net interest rate was 45.03%, a year-on-year increase of 3.9 percentage points. The increase in net interest rate in the first quarter was mainly due to low sales expenses, which is expected to be related to the reduction of academic conferences and other activities caused by the epidemic. 2022q1 company’s sales expense ratio / management expense ratio was 33.94% / 5.51%, a year-on-year decrease of 3.18 / 1.5 percentage points; The R & D expense rate was 13.59%, a year-on-year increase of 1.35 percentage points.
The dust mite drops of profit prediction and investment rating companies have a relatively mature market cultivation foundation in strong regions such as South China, but the penetration rate is still low and has a large market space; At the same time, with the company’s academic promotion, patient compliance is expected to improve, and the company is optimistic about the medium and long-term performance growth. At the same time, other weak regions are also expected to further develop and contribute to performance increment. The sublingual drops of Artemisia pollen allergen began to be sold in 2021. With the academic promotion of the company, it is expected to contribute performance flexibility in the northern market. It is estimated that the EPS from 2022 to 2024 will be 0.80/1.00/1.26 yuan respectively, corresponding to 49.68/39.76/31.36 times of the current share price PE. It will be covered for the first time and given a buy rating.
The risk indicates that the growth of new patients is less than expected; The sales of Artemisia annua were lower than expected; The epidemic situation affects business operation; Increased competition; Macroeconomic development is less than expected; Medical policy risk, etc.
