\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 607 Shanghai Pharmaceuticals Holding Co.Ltd(601607) )
Key investment points
The main business maintained rapid growth, and new momentum was injected into the implementation of fixed growth: the company achieved a revenue of 56.898 billion yuan, a year-on-year increase of 10.27%, and the net profit attributable to the parent company was 1.251 billion yuan, a year-on-year decrease of 40.99%, mainly due to the one-time special income realized by Q1 subsidiary turning into an associated enterprise in 2021. The net profit deducted from non parent company was 1.25 billion yuan, with a year-on-year increase of 2.98%. The company invested 448 million yuan in R & D expenses, with a year-on-year increase of 7.95%. After reducing R & D expenses, the net profit deducted from non parent company increased by 4.24% year-on-year. Participating enterprises contributed 199 million yuan in profits, a year-on-year decrease of 38.11%. Excluding the impact of participating enterprises, the main business maintained a good growth. Due to the impact of the epidemic, the company realized a net outflow of operating cash of 2.49 billion yuan. The company’s fixed increase will be implemented on April 8, introducing Yunnan Baiyao Group Co.Ltd(000538) as a strategic investor. While optimizing the ownership structure, it plans to combine the advantages of both sides to promote the common development of traditional Chinese medicine, health and other businesses, so as to inject new momentum into the medium and long-term development.
Increase R & D investment and optimize the incentive mechanism: in the pharmaceutical industry sector, the sales revenue of Q1 company in 2022 was 6.928 billion yuan, an increase of 7.14% over the same period of last year; The sales revenue of 60 key varieties was 4.033 billion yuan, a year-on-year increase of 15.05%; The industrial sector contributed a profit of 596 million yuan, a year-on-year increase of 7.76%. In recent years, in addition to increasing R & D investment, the company is also constantly optimizing the organizational structure and staffing, improving the performance appraisal system, and implementing the medium and long-term incentive plan in combination with the progress of specific projects. The total number of personnel in the R & D management center increased from 613 at the beginning of 2021 to 838 at the end of the year, an increase of 37%.
Stable head position and expanding service value: in the pharmaceutical distribution sector, Q1 company achieved a sales revenue of 50.157 billion yuan in 2022, an increase of 11.39% year-on-year; Pharmaceutical retail business achieved a sales revenue of 1.737 billion yuan, a year-on-year decrease of 9.39%. The commercial sector contributed a profit of 746 million yuan, with a year-on-year increase of 27.27%. Up to now, the total number of imported products has increased by 5, which continues to maintain the leading position of the commercial agent of imported innovative drugs and provide one-stop management services of the whole supply chain for innovative products of global pharmaceutical enterprises. In Q1 2022, the company’s non pharmaceutical businesses such as devices and great health continued to maintain a strong momentum, with a sales revenue of 6.698 billion yuan, a year-on-year increase of about 35%.
Profit forecast and investment rating: Based on: 1) stable development of distribution and industrial business; 2) The traditional Chinese medicine sector cooperates with Yunnan Baiyao Group Co.Ltd(000538) to develop large varieties and accelerate large-scale production; 3) I001, x842 and other innovative drugs will be on the market soon, bringing increment; 4) Internet + platform construction of commercial retail. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 5.980/69.83/8.194 billion respectively, with a growth rate of 17% / 17% / 17%, maintaining a double-digit growth rate. The current market value corresponds to 11 / 9 / 8 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk warning: the impact of repeated epidemic, the risk of centralized procurement and the risk of goodwill impairment
