\u3000\u3 Shengda Resources Co.Ltd(000603) 368 Guangxi Liuzhou Pharmaceutical Co.Ltd(603368) )
Key investment points
Event: the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the operating revenue reached 17.13 billion yuan (+ 9.4%); The net profit attributable to the parent company is 560 million yuan (- 20.8%); The net profit attributable to the parent company after deducting non-profit is 550 million yuan (- 18.7%). In the first quarter of 2022, the operating revenue was 4.81 billion yuan (+ 15.7%); The net profit attributable to the parent company is 220 million yuan (+ 6.4%); The net profit attributable to the parent company after deducting non profits was 220 million yuan (+ 11.3%).
Affected by policies such as medical insurance fee control and medical reform, the performance is under pressure in the short term. The slowdown in revenue growth and short-term pressure on profits are mainly due to the following three reasons: 1) DRGs promoted public hospitals to strengthen the control of drug proportion, affected the revenue growth of the company's wholesale sector, and had an incremental impact on the company's hospital sales of about 1.3 billion. 2) Due to the implementation of national centralized procurement, especially the local GPO in Guangxi, the price of relevant varieties has been significantly reduced, affecting the gross profit level and the sales of competitive products, and causing an incremental impact of about 1.2 billion on the company's hospital sales. 3) The increase in expenses led to a decline in net profit. In 2020, the company enjoyed a social security relief policy of more than 10 million yuan, while the relevant policies were cancelled in 2021, resulting in an increase in expenses. The overall demand of the industry is still strong. With the gradual implementation and digestion of the impact of policies and the company's adjustment of industrial structure according to policy changes, the expected performance growth rate will gradually recover.
The growth rate of retail pharmacies slowed down and the operation quality of stores was improved. In 2021, the revenue of the retail sector was 2.73 billion yuan (+ 9.6%), accounting for 16% of the company's total revenue; The net profit attributable to the parent company after non deduction is RMB 80 million, accounting for 14% of the total net profit attributable to the parent company after non deduction. By the end of 2021, the company had 739 pharmacies, 38 new and 7 closed. Among them, there are 625 Medicare pharmacies (86 newly added), 112 DTP pharmacies, 38 dual channel pharmacies, and 18 stores that have opened the overall payment of various chronic disease Medicare.
Release energy from the industrial sector and speed up the development and implementation of traditional Chinese medicine innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) and supporting service projects. In 2021, the company's pharmaceutical industry sector achieved a revenue of 540 million yuan (+ 17.2%), accounting for 3.1% of the company's total revenue; The net profit attributable to the parent company after non deduction was 100 million yuan, accounting for 18% of the total net profit attributable to the parent company after non deduction, and the profit contribution increased significantly. By the end of 2021, Xianzhu traditional Chinese medicine science and technology has produced and processed 930 varieties of traditional Chinese medicine pieces and more than 7000 product specifications, basically covering all commonly used varieties required by the hospital; Wantong pharmaceutical and Kangsheng pharmaceutical produce 6 dosage forms of Chinese patent medicine, including tablets, granules, pills and capsules, with a total of nearly 150 varieties. With the implementation of the capacity expansion project of traditional Chinese medicine decoction pieces in Nanning, the annual output of traditional Chinese medicine decoction pieces increased by 114.3% to 3000 tons / year, and the capacity scale increased significantly.
Profit forecast and investment suggestions. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 540 million yuan, 640 million yuan and 720 million yuan respectively, and the EPS will be 173 yuan, 194 yuan and 2.15 yuan respectively, corresponding to 9 times, 8 times and 7 times of PE respectively, maintaining the "buy" rating.
Risk warning: industry policy fluctuation risk; Risk of drug price reduction; The implementation of the project is not as expected; Epidemic risk
