\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 285 Henan Lingrui Pharmaceutical Co.Ltd(600285) )
Core view
Event: the company released its annual report for 2021, which realized an operating revenue of 2.694 billion yuan (+ 15.52%), a net profit attributable to the parent company of 363 million yuan (+ 11.08%), and a net profit not attributable to the parent company of 355 million yuan (+ 18.46%). At the same time, the quarterly report for the first quarter of 2022 was released. The operating revenue was 682 million yuan (+ 15.73%), the net profit attributable to the parent company was 131 million yuan (+ 35.41%), and the net profit not attributable to the parent company was 105 million yuan (+ 15.99%).
The patch continued to grow, and the core varieties performed steadily. In 2021, the income of plaster was 1.624 billion yuan (+ 14.64%); The sales volume of Tongluo Qutong ointment, the core product, increased by 11.4% and 15% in medical institutions; The sales volume of Zhuanggu musk analgesic cream increased by 8.51%, the best growth rate in recent years. Driven by the price increase and the increase in the proportion of the sales volume of upgraded products with high gross profit, the revenue and gross profit are expected to grow faster.
Capsules and other varieties continued to be used in large quantities, and the profitability of ointment was improved. Among other products, the revenue of capsule was 666 million yuan (+ 15.90%), mainly driven by the steady growth of Peiyuan Tongnao capsule and Shenqi Jiangtang Capsule. The tablet revenue was 148 million yuan (+ 36.59%), mainly due to the good synergistic effect between Danlu Tongdu tablet (the indication is to promote blood circulation and remove blood stasis for the treatment of lumbar disc herniation, lumbar degenerative diseases, etc.) and plaster, and the rapid growth of sales. Ointment revenue was 121 million yuan (- 10.34%), but Lingrui biology, a subsidiary of ointment, realized a net profit of 33.34 million yuan (+ 22%), and its profitability is still improving.
The sales expense ratio decreased steadily, the operating cash flow performed well, and the profit quality improved significantly. In 2021, the company improved the efficiency of marketing activities through fine cost management. The sales cost rate was 48.29%, a year-on-year decrease of 2.39 percentage points. In 2021, the net operating cash flow of the company was 846 million yuan, far exceeding the net profit, continuing the trend that the net operating cash flow has been greater than the net profit since 2018. We believe that it is mainly due to the changes in the sales and management mode of OTC industry, the enhanced control ability of enterprises over production planning, channel inventory and product sales flow, and the significant improvement of business quality, In the medium and long term, the company’s performance is more stable and growing rather than cyclical.
Profit forecast and Valuation: the company also announced that the profit distribution plan for 2021 is to pay a cash dividend of 0.5 yuan per share (including tax), and the current dividend rate has a high safety margin. We estimate that the company’s revenue from 2022 to 2024 will be 3.119 billion yuan, 3.512 billion yuan and 3.918 billion yuan respectively, with a year-on-year growth rate of 15.8%, 12,6% and 11.6%; The net profit attributable to the parent company was RMB 448 million, RMB 531 million and RMB 627 million, with a year-on-year growth rate of 24.0% / 18.4% / 18.2%. According to the closing price on April 27, the PE corresponding to the profit in 2022 was 13.5 times, and the “buy” rating was given for the first time.
