\u3000\u3000 Jiangsu Nhwa Pharmaceutical Co.Ltd(002262) (002262)
The company’s valuation is undervalued. Since the implementation of centralized purchase of generic drugs with quantity and the reconstruction of generic drugs logic, investors are generally not optimistic about the prospects of the whole generic drugs sector, and the valuation center of the whole generic drugs sector is moving down. Dragged down by the downward movement of the valuation center of the generic pharmaceutical sector, the company’s valuation is at the bottom of history. However, the price reduction risk of relevant products of the company may be overestimated, and the current valuation of the company is of great investment value. Moreover, the trend of the generic drug sector is basically in a bad position. Any news that the price reduction of centralized purchase or negotiation is lower than expected in the future may lead to the repair of the valuation of generic drugs.
The company’s product related market can grow. The company mainly produces anesthetics and psychotropic drugs. The volume of diagnosis and treatment services in China has got rid of the impact of the epidemic, the demand for anesthetics has recovered, and there is still a lot of room to expand the application scenario. The company’s anesthetics business is expected to continue to benefit from the growth of diagnosis and treatment services in China and the improvement of anesthetics penetration rate. With the development of society, people’s mental pressure is increasing day by day, their mental health awareness is improving, and the market space for mental health drugs is broad.
The company’s products are limited by centralized purchase. A considerable part of the company’s business belongs to refined anesthetics controlled drugs (anesthetics and class I psychotropic drugs). Such refined anesthetics are priced by the state and do not participate in centralized procurement. At present, the medical insurance bureau has not found any intention to reduce the national pricing of refined anesthetics. Although some varieties of class II psychotropic drugs produced by the company participate in centralized purchase, the company has been deeply engaged in central nervous system drugs for many years, which has cost advantages and R & D advantages. It is expected to make more gains in centralized purchase in the future.
The company’s performance grew steadily and its R & D investment continued to strengthen. Benefiting from the broad market and rapid development of psychotropic drugs, the company’s profits have maintained rapid growth for many years. In the first three quarters of 2021, the company’s revenue increased by 21.79% year-on-year, faster than the growth rate of net profit attributable to parent company by 17.76%. The company continues to promote consistency evaluation and research and development of generic drugs and innovative drugs. In recent years, the proportion of the company’s R & D investment has been increasing. In the first three quarters of 2021, the proportion of the company’s R & D expenses in revenue has increased to 8.13%.
Judgment and rating description of Industry Valuation: we predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 881 / 1080 / 1314 million, the corresponding EPS will be RMB 0.87/1.07/1.30, and the corresponding PE will be 18 / 14 / 12 times. Give a “recommended” rating.
Risk warning: the risk of centralized purchase and price reduction of relevant drugs, the risk of national pricing reduction of refined hemp drugs, the risk of failure of new drug research and development, etc
