\u3000\u3 China Vanke Co.Ltd(000002) 603 Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) )
Key investment points
(1) the aging of the population is deepening, and the demand for cardiovascular and cerebrovascular Chinese patent medicines is rising. With Tongxinluo, Shensong Yangxin and Qiliqiangxin capsules as its main products, the company achieved a revenue of 3.447 billion yuan in 2020, with a year-on-year increase of 11.31%; In the first half of 2021, the revenue was 2.554 billion yuan, with a year-on-year increase of 46.44%, and the market share further increased.
(2) covid-19 promotes the company’s performance. First, covid-19 diagnosis and treatment plan of Lianhua Qingwen – “three drugs and three parties” has made an important contribution to epidemic prevention and control. In 2020, the company’s Lianhua Qingwen products achieved an operating revenue of 4.256 billion yuan; In the first half of 2021, the revenue was 2.492 billion yuan, a year-on-year increase of 23.12%. Second, the brand awareness has been improved, and the market share of household standing drugs is expected to increase significantly, which is good for the company’s long-term performance.
(3) the exclusivity of the product has become a powerful moat for the company, and the price reduction of centralized mining is moderate. The proposed alternative price of Lianhua Qingwen is 2.3295 yuan / bag; The price of online stores with large sales volume on Taobao platform is about 2.7 yuan / bag (10 boxes and 100 bags). Compared with the retail price of 100 bags, the quotation of centralized purchase decreases by 13.72%, with moderate price reduction; On the other hand, there are differences between the regions participating in the centralized mining and the main revenue regions of the company. Shanxi, Hainan, Ningxia and Qinghai provinces are newly added. If the centralized mining wins the bid, it will help to expand the product market.
(4) strong R & D strength to maintain the company’s competitive advantage. The company further improved the construction of “traditional Chinese medicine chemical raw medicine health product R & D innovation system”, and the R & D investment increased year after year.
(5) the overseas market has broad prospects. The “the Belt and Road” policy encourages Chinese medicine enterprises to go abroad, and the market of Chinese medicine industry will be broader in the future. In 2020, the company’s overseas revenue was 304 million yuan, a year-on-year increase of 918%, and the internationalization process was accelerating.
Our differences from the market: 1 At present, the market generally focuses on Lianhua Qingwen series. However, with the continuous expansion of the cardiovascular drug market for the middle-aged and elderly, the performance of the company’s cardiovascular and cerebrovascular products is also worth looking forward to; 2. The layout of overseas business lines is expected to become another revenue growth point of the company.
Potential catalyst: supported by the national industrial policy, Lianhua Qingwen has been registered in several “the Belt and Road” countries, and is expected to open up new overseas markets in the future; The company’s chemical medicine, great health and other product lines have been approved and listed overseas; Market expansion of household standing drugs, etc.
Profit forecast and valuation
We expect the company’s profitability to continue to improve, with EPS of 0.93/1.06/1.18 yuan / share from 2021 to 2023. The current price corresponds to a P / E ratio of 28 / 25 / 22 in 2021 / 22 / 23. Referring to the valuation of comparable companies, we think it is reasonable to give the company 30 times PE in 2022. It is speculated that the target price of the company is 31.80 yuan / share, and the “recommended” rating is given for the first time.
Risk tips
Risk that the progress of innovative drugs is less than expected; Market competition intensifies risks; The change of global epidemic situation exceeds the expected risk; The risk of policy exceeding expectations.
