Key investment points
Event: On August 28, 2018, the company released the 2018 semi annual report. In the first half of 2018, the operating revenue reached 981 million yuan, with a year-on-year growth of 110.41%; The net profit attributable to the parent company was 350 million yuan, up 50.44% year on year; The net profit not attributable to the parent company was 335 million yuan, up 74.20% year on year. At the same time, we forecast the business situation from January to September, 2018. It is estimated that the net profit attributable to the parent company from January to September 2018 will be 508-586 million yuan, with a year-on-year growth of 30% - 50%.
Comments: The deduction of non income increased by 74%, and the performance was outstanding. We look forward to the gradual increase of naduramide in the second half of the year. We expect that the impact of the two vote system will lead to the increase of the factory prices of the company's main varieties, which will make the revenue growth faster than the profit growth. Bio pharmaceuticals and bio pharmaceuticals are the company's main classified products, with revenue and gross profit accounting for about 80%. In the first half of 2018, biopharmaceuticals, biochemical drugs and chemical drugs respectively achieved revenue of 801 million yuan (10124%+), 171 million yuan (157.18%+), gross profit of 666 million yuan (13287%+) and 154 million yuan (24086%+). Quarter by quarter, the second quarter of 2018 continued the high growth of the first quarter. In the second quarter, the revenue of a single quarter was 541 million yuan, with a year-on-year growth of 125.63% and a month on month growth of 22.83%; The net profit attributable to the parent company was 168 million yuan, up 58.83% year on year. We expect that the company's genetic engineering products (interleukin-11, recombinant human basic fibroblast growth factor, etc.), temozolomide, Xingling dropping pills, enoxaparin sodium, etc. will benefit from the bidding and sales work to achieve rapid growth in sales. The company's first blockbuster imitation product, Lenalidomide, was officially launched at the end of February, and achieved a sales revenue of more than 48 million yuan in the first half of the year. At present, Naduramide has completed the medical insurance negotiation and networking in most provinces of the country. The development of hospitals is progressing in an orderly manner, and we expect to continue to increase in the second half of the year. In the first half of 2018, the gross profit rate of the pharmaceutical industry was 84.42%, a significant increase compared with 71% in the same period last year, mainly because the two vote system affected the increase of factory price; In addition, the increase in the proportion of genetic engineering varieties with high gross profit rate in income also has an impact.
In the first half of 2018, the sales expense rate was 36.57%, the management expense rate was 7.15%, and the financial expense rate was -0.97%.
The sales expense was 359 million yuan, with a year-on-year increase of 382.70%, which was mainly caused by the change of sales mode and the adjustment of sales strategy, as well as the large increase of related expenses for the expansion of sales hospitals for Lenalidomide. The management expense rate was 70.0982 million yuan, an increase of 56.63% year on year, mainly due to the increase of R&D expenditure, etc. The proportion slightly decreased due to the rapid expansion of income scale.
The research and development work continued to advance and made some progress. In the first half of 2018, the consistency evaluation of Jiaoning, Leining, Xinfunuo and other products of the company progressed smoothly; In the first half of the year, the clinical trial approval documents of recombinant human anti CTLA-4 monoclonal antibody injection and long-acting recombinant human follicle stimulating hormone injection were obtained.
Profit forecast and investment suggestions: We expect that the company's operating revenue in 2018-2020 will be 1.688 billion yuan, 2.122 billion yuan and 2.772 billion yuan, with year-on-year growth of 35.94%, 25.67% and 30.64%. The net profit attributable to the parent company will be 612 million yuan, 802 million yuan and 1.083 billion yuan, with year-on-year growth of 14.64% (excluding 60%+), 31.19% and 34.98%. The corresponding EPS will be 0.89, 1.17 and 1.58 yuan. It is considered that lenalidomide will enter the high volume period, and the products under research will be abundant, maintaining the "buy" rating.
Risk tip: the marketing sales of lenalidomide are less than expected, the drug bidding is less than expected, and the marketing reform is less than expected.
