\u3000\u3 China Vanke Co.Ltd(000002) 603 Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) )
Key investment points
Recommendation logic: 1) Lianhua Qingwen capsule has a revenue of more than 4 billion yuan in 2021 and has been registered in more than 30 overseas countries, opening up growth space for overseas market expansion; 2) The revenue of cardio cerebrovascular 2021 was 4.53 billion yuan, an increase of 44.8% against the trend, and the market share of the three fist products increased to 17.8%, which is expected to maintain a growth of 15% in the next three years; 3) Innovation and R & D efforts have been strengthened, and six varieties of traditional Chinese medicine have been gradually listed, forming an innovative product echelon. Lianhua Qingke capsule, Jieyu Chufan capsule and Yishen Yangxin Anshen tablet are expected to increase in large quantities.
Lianhua series brand establishment, internationalization and opening up overseas markets. Lianhua Qingwen ranked first in the sales of Chinese patent medicine for cold in the public medical market in the first half of 2021 and became the largest brand of Chinese patent medicine for cold in the retail market. The overall market scale of cold medicine / heat clearing market was about 31 billion in 2021, with a year-on-year decrease of 10.8%. In 2021, Lianhua Qingwen capsule ranked second in the sales of cold medicine / heat clearing in the retail terminal, with a market share of 6.6%. Covid-19 epidemic prevention is normalized, and Lianhua Qingwen is included in the epidemic prevention guide. With the establishment of product brands and the liberalization of drug purchase restrictions in pharmacies, it is expected to further rebound. The company has been registered in more than 30 countries and regions, and its overseas sales revenue reached 240 million yuan in 2021. Even the internationalization process of huaqingwen capsule is constantly advancing. Lianhua Qingke tablet was listed in May 2020 and included in the medical insurance catalogue in 2020. It forms a joint force with Lianhua Qingwen to treat covid-19. It is expected to continue to grow in large quantities with the brand advantages of Lianhua series.
Cardio cerebrovascular products grew against the trend, and the market share gradually increased. The company’s revenue in cardio cerebrovascular 2021 was 4.53 billion yuan, an increase of 44.8%. Tongxinluo capsule, Shensong Yangxin capsule and Qiliqiangxin capsule ranked second, fifth and ninth respectively in the ranking of oral administration of Chinese patent medicine for cardiovascular diseases in the public medical market in the first half of 2021. According to minenet, the market share of the three products in the public medical market for Chinese patent medicine for cardiovascular diseases increased to 17.8% in the first half of 2021. With the aging of the population, the oral Chinese patent medicine for cardio cerebrovascular in hospital has increased steadily. The oral Chinese patent medicine for cardio cerebrovascular in hospital has increased by 14% in 2021h1, the share of oral Chinese patent medicine for cardio cerebrovascular has increased to 57.5%, and the CAGR from 2015 to 2020has reached 5.9%. In 2021, the market scale of retail cardio cerebrovascular Chinese patent medicine reached 19 billion, with a year-on-year increase of 17.6%, and a compound increase of 8.8% from 2017 to 2021. The market concentration of retail cardiovascular and cerebrovascular Chinese patent medicine also shows an upward trend.
R & D investment has been increased, and the performance elasticity of new varieties is considerable. Jinlida granule ranked second in the sales of Chinese patent medicine for diabetes in the public medical market in the first half of 2021, with a market share of 10.8%. Jieyu Chufan capsule for mild and moderate depression and Yishen Yangxin Anshen tablet for insomnia are expected to enter medical insurance in 2022. Six traditional Chinese medicines are carrying out clinical research to expand the field of new products for mental diseases, which is expected to become a new business growth point of the company. Xiaoer Lianhua qinggan granule has been approved for clinical application, and phase II clinical research is being carried out at present. The three new products have been approved to market through randomized controlled clinical trial data, providing a solid basis for clinical promotion. In the medium and long term, Lianhua Qingke tablet is positioned in the cough market and is expected to become one billion varieties. Jieyu Chufan capsule can become 500-1 million varieties of Shugan Jieyu capsule (terminal sales scale is about 500 million) of Kanghong.
Profit forecast and rating. The company has a solid foundation in the respiratory and cardiovascular and cerebrovascular market, and the old varieties continue to grow steadily. The second echelon varieties Jinlida, Bazi Bushen and xialiqi are in a period of rapid growth. The three new varieties listed in recent two years, Lianhua Qingke tablet, Jieyu Chufan capsule and Yishen Yangxin Anshen tablet, are also about to be in large quantities, laying the foundation for sustainable growth. Overall, the company’s brand advantages are established, and the new products are growing in large quantities. The compound growth rate of profit from 2022 to 2024 is 22.6%. We give the company a “buy” rating of 30 times PE in 2022 and a target price of 29.1 yuan.
Risk tip: the R & D progress is less than expected and the promotion of new products is less than expected.
