\u3000\u3000 Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) (300026)
The company is one of the earliest national pilot enterprises of traditional Chinese medicine formula granules, and also involves medical devices, finished drugs and other businesses. The company has 6 business segments, covering traditional Chinese medicine formula granules, finished drugs, raw and auxiliary materials, medical devices, medical and health services and intelligent supply chain of medicine and equipment; In the field of traditional Chinese medicine formula granules, the company has experienced more than 20 years of development. After the promulgation of the Interim Provisions on the administration of traditional Chinese medicine formula granules in 2001, the company has become one of the national pilot enterprises of traditional Chinese medicine formula granules.
With the implementation of the national standard, formula particles ushered in a period of rapid growth. From November 1, 2021, the national standard of traditional Chinese medicine formula granules will be implemented. After the introduction of the national standard, the sales places of traditional Chinese medicine formula granules have also expanded from the original traditional Chinese medicine hospitals above level II and hospitals integrating traditional Chinese and Western medicine to traditional Chinese medicine hospitals below level II, traditional Chinese medicine departments of general hospitals and grass-roots medical institutions providing traditional Chinese medicine diagnosis and treatment services. In addition, the liberalization of prescription rights has further expanded the market, expanded the scope of practice of non traditional Chinese medicine doctors, traditional Chinese medicine and integrated traditional Chinese and Western medicine doctors, and promoted the equal emphasis and complementary advantages of traditional Chinese and Western medicine. It has become a new development trend, and the main body of traditional Chinese medicine prescriptions will increase. The release of sales terminal and prescription right has greatly broadened the sales path of formula particles; At the same time, the continuous promotion of relevant medical insurance payment policies will also accelerate the large-scale production of formula particles. In terms of price, the national standard puts forward higher requirements for the production process of formula particles, and the overall price of the industry is expected to rise. Formula granules are expected to replace traditional Chinese medicine and Chinese patent medicine, and the overall increment of the market is considerable.
Industry entry barriers have risen and the company’s position is stable. The launch and implementation of the national standard put forward higher requirements for the production capacity and reserve varieties of formula particle production enterprises, which is more conducive to Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) and other enterprises with long-term accumulation of formula particles. First of all, the enterprises that obtained the national pilot qualification of formula granules earlier have a deeper understanding of the national standard. New companies need a certain time to explore the national standard and carry out production, filing and sales, which is difficult to catch up with. Secondly, in the sales process of formula granules, the depth of cooperation between hospitals and enterprises plays an important role. It is difficult for new entrants to surpass several leading enterprises occupying the market of traditional Chinese medicine hospitals above secondary level and integrated traditional Chinese and Western medicine hospitals. In terms of market share, Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) and other six companies had the qualification of national pilot manufacturer of traditional Chinese medicine formula granules before the implementation of the new national standard, with a total market share of more than 90% in the formula granules Market and a stable market position.
Medical devices and finished drugs are also expected in the future. Oximeter is the key product of the company’s instrument sector, and the market space is promising for a long time. There is a strong demand for oximeters, and portable devices expand the use scene. The rising prevalence of chronic diseases, the increase of the global elderly population, and the growing preference of patients and health care providers for noninvasive medical devices and procedures have all driven the growth of the market; At the same time, the company focuses on the portable oximeter that can expand the use scene. The main product of the company’s finished drug sector is Xuebijing. The contract renewal of Xuebijing is successful, and the growth space is optimistic for a long time. In 2019, Xuebijing reduced its price by about 46.54% and was incorporated into the national medical insurance through medical insurance negotiation. The terminal coverage was expanded from the first 15 provinces to 31 provinces in China, and the product sales space was further improved. In the national medical insurance negotiation in 2021, the company successfully renewed the contract at the current price. The company also adjusted its organizational structure and made efforts to achieve a breakthrough in the regional market with high sales potential. We expect the annual income growth rate of Xuebijing to be close to 20% in the next three years.
Profit forecast and investment rating of the company: we expect the net profit of the company from 2021 to 2023 to be RMB 738 million, RMB 1029 million and RMB 1284 million respectively, corresponding to EPS of RMB 0.25, 0.34 and 0.43 respectively. The current share price corresponds to the PE value from 2021 to 2023, which is 29, 22 and 17 times respectively. The company’s formula granule business benefits from the liberalization of sales channels and prescription rights under the implementation of national standards, the market substitution of Chinese patent medicine and traditional Chinese medicine decoction pieces, and has a good expectation of price increase. We are optimistic about the rapid growth of the company’s formula granule business, and the medical devices and finished drugs can also be expected in the future. We will give a “strongly recommended” rating for the first time.
Risk tips: the promotion of industrial policies is less than expected, the speed of market development is less than expected, and the risk of raw material cost changes.
