\u3000\u3000 Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) (603896)
Recommendation logic: 1) the company benefits from the rapid development of the market of Chinese herbal pieces and health products. In 2020, the market scale of Chinese herbal pieces will exceed 200 billion yuan. In addition, the market scale of health products industry is expected to exceed 243.5 billion yuan by 2025. 2) The product has the advantages of good curative effect, breeding barrier and processing technology. The third generation wall removal technology has obtained an exclusive patent, and its effective component is 10 times that of other wall broken Ganoderma lucidum spore powder; 3) The channels outside the province will expand rapidly, open up the franchisee model outside the province, promote high-end new dosage forms of spore powder tablets, and it is expected to add 30 urban agents in 2022.
The brand power of the product has been gradually strengthened, and the price of new product dosage forms has increased significantly. The company's products have three core advantages: 1) the product has a wide range of indications and remarkable anti-cancer effect. From the clinical data, Ganoderma lucidum spore powder can significantly strengthen the therapeutic effect of a variety of tumors, and has health care effects such as improving immunity, preventing cardiovascular and cerebrovascular diseases and Alzheimer's disease; 2) Breeding barrier: the company cultivates excellent varieties of Ganoderma Lucidum with high yield and high content of effective components through breeding technology. 3) processing technology: the company's third-generation wall removal technology has obtained an exclusive patent, which has no heavy metal pollution and effectively avoids oxidation. The effective components such as Ganoderma lucidum polysaccharide and Ganoderma lucidum triterpene of the third-generation wall removal Ganoderma lucidum spore powder are 10 times that of other common wall breaking Ganoderma lucidum spore powder.
Vigorously develop online channels, expand outside the province and open up market growth space. In 2020, the company's revenue in the province exceeded 400 million yuan, accounting for 64%, the Internet sales revenue was 150 million yuan, accounting for 22.9%, and the revenue outside the province was 79.33 million yuan, accounting for 12.5%. With the enhancement of the company's brand strength, the compound growth rate of revenue of online channels from 2016 to 2020 was 45%, and the development of online channels achieved rapid growth of revenue. At the end of 2021, the company vigorously explored channels outside the province. By opening up new franchisees (Urban agents), the main development areas are Beijing, Shanghai, Guangzhou and Jiangsu. The high-end new dosage form spore powder tablets are mainly promoted in the markets outside the province. The annual taking cost of the tablets is 34000-68000 yuan, and the powder and granules are 19000-39000 yuan respectively according to the taking situation. The dealers give greater discounts. It is expected that 30 urban agents will be added in 2022, and the market revenue outside the province will increase rapidly.
The policy of decoction pieces of traditional Chinese medicine is favorable, and the health care industry is developing rapidly. 1) Chinese Herbal Pieces: the market scale of Chinese herbal pieces has increased from 56.2 billion yuan in 2009 to 200 billion yuan in 2020. There are many favorable policies for the traditional Chinese medicine decoction pieces industry. The state proposes to set up a special service fee for traditional Chinese medicine decoction pieces, implement 80% medical insurance reimbursement for traditional Chinese medicine decoction pieces, and allow to retain 25% of the retail price markup. The price of wild Chinese herbal medicines continues to rise, and the company benefits from industrial integration, which can greatly resist the risk of cost fluctuation; 2) In 2019, the scale of China's health care products market exceeded 171 billion yuan, with low market penetration, the increase of China's high net worth population and the acceleration of population aging, which is expected to further drive the rapid development of the health care products market.
Profit forecast: EPS is expected to be 1.23 yuan, 1.55 yuan and 1.97 yuan respectively from 2021 to 2023. Considering the performance increment brought by the company's expansion outside the province, the compound growth rate from 2021 to 2023 is 25.5%.
Risk tip: the price and output of raw materials fluctuate sharply, and the expansion outside the province is less than expected.
