\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 39 Apeloa Pharmaceutical Co.Ltd(000739) )
In this report, we mainly answer a core question through the reply of the company: what is the future growth space for Apeloa Pharmaceutical Co.Ltd(000739) ? We believe that the cdmo business of the company is still underestimated, and the growth of the two major businesses of API preparation under the advantage of integration has not been fully exploited.
As a leading pharmaceutical manufacturing enterprise with comprehensive development of API + cdmo + Preparation with Chinese characteristics, its performance has maintained rapid growth and outstanding competitive advantage. 1) Cdmo: the core growth driver in the future, is seizing the opportunity of pattern reconstruction and is expected to usher in leapfrog growth. At present, its advantages and capabilities are still underestimated. 2) API: the comprehensive manufacturing capacity is outstanding and will maintain steady growth in the future. 3) Preparations: International, integrated and differentiated layout, focusing on the incremental market of API + preparations.
Growth momentum of FuPan company since 2017: the new management team took office, deepened internal integration, comprehensively improved management efficiency, steadily increased revenue and rapidly increased profits. Looking forward to the new stage, the company will continue to invest in R & D and production capacity (it is expected that the capital expenditure will reach 7 billion yuan in the next five years and the R & D team will reach 2000 people in 2025), and continuously improve the synthetic production and project undertaking capacity. With the gradual completion of the structural upgrading from “starting materials + registered intermediates” to “registered intermediates + APIs”, and the accelerated transfer of superimposed projects, cdmo business is expected to continue to drive rapid growth; Under the background of the normalization of centralized purchase in China and the expiration of a new round of global drug patents, API + preparations have broad development space.
Why the company’s cdmo business is still underestimated: 1) “back-end entry” also has strong customer acquisition ability. Front end diversion plays an important role, but it is not the only decisive factor. Enterprises entering the back end also have development potential under the background of excellent technology and sound system. Typical cases are the cdmo business cooperation between the company and yanye. 2) Veterinary drug barriers are not low, the pattern is stable and the life cycle is longer. The main players of veterinary drugs are concentrated in the world’s well-known large pharmaceutical enterprises. Like human drugs, veterinary drugs in the United States and the European Union are supervised by FDA and EMEA, with a set of detailed and strict regulatory requirements and high quality system requirements. The single variety of veterinary drugs has small scale, high imitation cost, and different from human drugs, there is no “patent cliff” and its life cycle is longer.
3) from the analysis of system, R & D, projects, customers and production capacity, the company’s cdmo business has strong compliance ability and full growth. The company’s cdmo business quality is excellent, the EHS system is perfect, and the three R & D centers in Hengdian, Shanghai and Boston provide solid support. The back-end commercialization is accelerated and the front-end BD is accelerated. Both Chinese and foreign customers are taken into account, continuous production expansion and upgrading are carried out, the “four modernizations” construction is firmly carried out, and the project acceptance capacity is continuously improved.
Under the advantage of integration, the growth of API preparation has not been fully explored. API + Preparation integration enterprises will have a very leading competitive advantage in the generic pharmaceutical market in the future, especially those enterprises starting from API and global product layout. Six products of the company’s integrated preparation varieties, including memantine hydrochloride tablets, cefixime tablets, ceftazidime for injection, ubenimex capsules, cefixime granules and metoprolol succinate sustained-release tablets, have been approved successively. Three products, including levetiracetam tablets, levofloxacin tablets and ceftazidime for injection, have won the bid, and the centralized collection has begun in succession. In 2022, cefixime tablets Cefixime granules and metoprolol succinate sustained-release tablets and other three products are expected to participate in the seventh batch of national centralized procurement, and the subsequent approved varieties will gradually increase. The incremental market outside China brought by integration deserves special attention.
Profit forecast and investment suggestions: we expect the company’s revenue from 2022 to 2024 to be 10.002, 11.795 and 14.050 billion yuan, with a year-on-year increase of 11.8%, 17.9% and 19.1%; The net profit attributable to the parent company was 1.097 billion yuan, 1.432 billion yuan and 1.863 billion yuan, with a year-on-year increase of 14.8%, 30.6% and 30.1%; The corresponding EPS is 0.93, 1.22 and 1.58 yuan. The average valuation of comparable companies is about 49 times in 2022. At present, the company’s share price corresponds to 27 / 20 / 16 times PE from 2022 to 2024. Considering the company’s rich reserve varieties and continuous investment in cdmo, the preparation maintains a rapid pace of approval. With the release of new production capacity, the continuous commercialization of new projects and the rapid release of centralized purchase of preparations, the performance is expected to maintain rapid growth. It is covered for the first time and given a “buy” rating.
Risk tips: product R & D and technological innovation risks; International trade environment change risk; Environmental protection and safety production risks; Exchange rate fluctuation risk; There is a risk that the public information is delayed or not updated in time.
