On January 24, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) issued an announcement on abnormal fluctuations in stock trading.
On January 20, January 21 and January 24, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) the daily closing price fell by more than 20% in three consecutive trading days. Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) announced that after self-examination, there was no violation of fair disclosure of information.
At the close of today, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) shares closed at 10.34 yuan / share, down 8.90%.
performance explosion
Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) (hereinafter referred to as Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) ), was listed on the small and medium-sized board of Shenzhen Stock Exchange in 2009. Its main products include compound Xueshuantong capsule, Zhongsheng pill, Qingre Qushi granule, etc., of which the core product is compound Xueshuantong capsule for cardiovascular and cerebrovascular diseases.
In the first few years of listing, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) has basically maintained a gross profit margin of more than 60% and a net profit margin of 16% - 20%, but its performance growth mainly depends on Chinese patent medicine products. According to the annual report data from 2018 to 2020, the proportion of proprietary drugs basically exceeds 50%.
In 2013, in order to optimize the company's product structure and reduce the risk of income dependence on a single product, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) increased its capital and controlled Yunnan Yikang Pharmaceutical Co., Ltd. and Hubei Lingsheng Pharmaceutical Co., Ltd., with goodwill of 27.9 million yuan and 6.95 million yuan respectively; In 2015, it acquired Xianqiang pharmaceutical, and recorded 916 million yuan of goodwill; In 2017, it acquired Zhanjiang aolide vision optical center Co., Ltd. and Xuancheng Eye Hospital Co., Ltd., and then included the goodwill of RMB 176 million and RMB 80.43 million respectively; In 2018, through the acquisition of Yishu pharmaceutical and Guangzhou sugar net Medical Technology Co., Ltd., the goodwill of RMB 163 million and RMB 8.918 million were included respectively.
Under the strategy of continuous buying, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) goodwill value began to rise. By the end of 2018, its goodwill value had reached 1.351 billion yuan. At this time, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) had no intention of withdrawing goodwill.
However, at the same time, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) the post merger integration effect has not reached the expectation. In 2014 and 2015, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) fully accrued the goodwill impairment loss of RMB 6.95 million formed by the acquisition of Lingsheng pharmaceutical in two times. In 2019, it accrued 40.5 million yuan of goodwill impairment loss for the goodwill formed by the acquisition of Xianqiang pharmaceutical.
In 2020, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) made a one-time centralized provision for the impairment of large goodwill of 845 million yuan on the grounds of the epidemic situation, the difficulty of technological development and the change of market environment.
The provision of such large amount of goodwill directly made the annual net profit loss of Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) 2020 reach 426 million yuan. Therefore, we also received a letter of concern from Shenzhen Stock Exchange, asking the company to explain whether there is profit adjustment through the provision of large amount of goodwill impairment.
Subsequently, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) also said in the reply released that due to the impact of the epidemic and the pressure of national centralized purchase of some varieties in 2020, the company was prepared to accrue the goodwill of relevant assets. In this way, the "pot" of reputation storm was thrown to the epidemic and centralized mining.
In the third quarter of 2021, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) began to recover after getting rid of the "burden" of high goodwill. Data show that its revenue in the third quarter was 613 million yuan and its net profit reached 25.9641 million yuan.
Chinese patent medicine dilemma
After the storm of goodwill, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) 's performance has been greatly affected, but its performance in recent years seems not bright.
According to the data, from 2018 to 2020, its revenue was 2.362 billion yuan, 2.532 billion yuan and 1.896 billion yuan respectively, with a year-on-year increase of 20.23%, 7.2% and - 25.11% respectively, basically showing a situation of weak growth. Its net profit was 436 million yuan, 318 million yuan and - 427 million yuan respectively, and it fell into the situation of increasing revenue without increasing profit.
It is reported that since 2010, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) has begun to lay out the research and development of small molecule innovative drugs, and in 2015, it joined hands with Wuxi Apptec Co.Ltd(603259) to develop innovative drugs. Up to now, the company has deployed innovative drugs in respiratory, ophthalmology, oncology and NASH. At present, six class I innovative drugs have completed preclinical research.
In terms of R & D investment, from 2018 to 2020, it reached 84.2914 million yuan, 133 million yuan and 114 million yuan respectively. By the third quarter of 2021, its R & D investment reached 87.1652 million yuan. However, judging from the R & D Progress of all varieties under research, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) still needs a lot of long-term R & D continuous investment. Moreover, the research and development of innovative drugs is difficult and the risk of failure is huge. Whether it can counter attack through new drug research and development is still unknown.
At present, the Chinese patent medicine market with the largest proportion of revenue of Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) is also facing great difficulties.
It is reported that since 2017, China's production of Chinese patent medicines has been decreasing year by year. According to the statistics of the National Bureau of statistics, the cumulative production of Chinese patent medicines in 2020 reached 2.319 million tons, a cumulative decrease of 3.9%.
At the same time, in 2021, two large-scale inter provincial alliances launched centralized procurement of Chinese patent medicines, namely, the 19 provincial alliance in Hubei and the 6 provincial alliance in Guangdong. At present, the centralized purchase of Chinese patent medicine in Hubei has been completed. 182 products of 157 enterprises have participated in the quotation, and the procurement scale is nearly 10 billion yuan. A total of 97 enterprises and 111 products have been selected, with a selection rate of 62%. The average price of the selected products has decreased by 42.27% and the maximum decrease of 82.63%.
Chinese patent medicine has been the main revenue of Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) , accounting for nearly half of the revenue. According to the data, the proportion of proprietary drugs has also increased from 55.66% in 2018 to 61.26% in 2020, and the proportion of chemical drugs has been maintained at about 30%.
Insiders said that under the background of medical insurance fee control and volume procurement, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) the original drug system is bound to be impacted, while its generic drugs such as metformin hydrochloride tablets, cefradine capsules and other competitive products are more, and the volume is limited in the future.
In the case of unsuccessful research and development of innovative drugs and centralized purchase of Chinese patent medicines, it also brings great pressure to Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) . Maybe we can see a little clue from the secondary market.
In 2021, the share price of Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) did not increase significantly, and remained floating up and down at 10 yuan / share. After a dividend payment of 0.02 yuan / share on May 28, 2021, the share price also increased. Until January 2022, with the blessing of covid-19 oral drug concept stocks, Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) ushered in a rise. On January 21, the share price hit a one-year high of 15.76 yuan / share.
Data source: China stock market news
In addition, in December 2021, Zhejiang Conba Pharmaceutical Co.Ltd(600572) was publicly listed to transfer 42% of the equity of zhenximing company, including Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) among the qualified intended transferees, of which Guangdong Zhongsheng Pharmaceutical Co.Ltd(002317) plans to transfer 0.75% of the equity.
The reporter sent an interview letter to the enterprise on the company's business and other issues. As of press time, no reply has been received from the enterprise.
