Kelun Pharmaceutical (002422): Non-infusion preparations with rapid performance are expected to develop rapidly

Kelun Pharmaceutical (002422): Non-infusion preparations with rapid performance are expected to develop rapidly
11 Apr
2020

Kelun Pharmaceutical (002422): Non-infusion preparations with rapid performance are expected to develop rapidly
Key points of investment: The company announced its 2018 annual report and realized revenue of 163.5.2 billion (+43.00%), to achieve net profit of return to mother 12.1.3 billion (+62.04%), deducting non-attributed net profit11.1.3 billion (+698.96%).Basic income is 0.85 yuan.Performance is in line with expectations.Profit distribution plan: proposed 10 distribution 2.096 yuan (including tax). Ping An’s 深圳桑拿网 point of view: The growth of various business segments is steady, and the gross profit margin has increased significantly: the company’s gross profit margin is 59.56% (+8.25pp), the gross profit margin increased significantly, of which infusion products achieved operating income of 98.8 billion (+30.37%), with a gross profit margin of 71.18% (+7.48pp), the primary role of its revenue and gross margin improvement include: the impact of two-vote system high billing, the increase in the proportion of high-gross products such as soft plastic products, energy conservation, consumption reduction and cost reduction.Non-infusion segment achieved sales revenue 62.4.2 billion (+66.37%), with a gross profit margin of 42.68% (+15.07pp), its income and gross profit margin increase include: Chuanning achieved full production, turning losses into 北京夜网 profit; core products of plastic water injection and rehabilitation of new fluid rapid growth; the impact of the two-vote system. Chuanning’s stable and full production, optimistic about sustainable profitability: Chuanning realized income 32.8.6 billion, net profit 6.09 million yuan.By the end of the main product line, full production has been achieved. In terms of products, sulfur red is in full production. Cephalosporin began full production in May and 6APA began full production in April.Sulfur red has experienced a price increase in the past two years and is currently at a higher price; the prices of 6-APA and penicillin industrial salts have improved in the past year and the current price is at a historical mid-level; 7-ACA prices have stabilized in the past year.On the whole, the company’s product prices have little downside risk, and the price may rise after the gradual environmental protection becomes serious.The environmental advantages and cost advantages of the Chuanning base will be the key factors for long-term success. We are optimistic about the profitability of the company’s segment for a long time. Generic drugs have entered the harvest period and are developing rapidly: the company achieved sales revenue of non-infusion preparations in 201828.5.7 billion (+51.14%), continued to maintain high-speed growth, and the successive listing of new products is the main driving force for revenue growth.The top 18 generic drugs approved for listing, 4 of which are the first in China, and 4 of the 6 products that passed the consistency evaluation are the first (Esseletyloxalate oxalate tablets, Pulandrin hydrobromide tablets,Metronidazole tablets, tinidazole tablets), at the critical moment of the current consistency evaluation to seize the market, the company won four first to pass the consistency evaluation, reflecting the company’s R & D department’s efficient execution.At present, 13 products are applying for consistency evaluation, and 14 generic drugs are applying for production. It is estimated that within this 2-3 years, the company will list more than 70 generic drugs, adding a large number of new products to the pharmaceutical preparation sector, which can be the basis for performance growth.In terms of new drug research and development, the company obtained 5 new drug clinical approvals in 2018. Cetuximab analogs are in the clinical phase III and PDL-1 is in the clinical phase I. There are more than 10 new drug projects in the clinical stage.The harvest period will usher in 1-2 years. Maintaining the “Recommended” level: The drug research and development sector is in an orderly manner. A large number of generic drugs will be listed in 1-2 years. After 2 years, innovative drugs will be listed on the market. In the future, the company is expected to become a large generic drug company and a domestic first-class innovative drug company.The penetration of packaging materials and product upgrades in the infusion segment will maintain steady growth; the antibiotics segment is steadily improving, and the Chuanning project has achieved full production.The company’s EPS for 2019-2021 is expected to be 1.09 yuan, 1.28 yuan, 1.52 yuan (the original forecast was 2019, and the corresponding EPS in 2020 was 1.08 yuan, 1.27 yuan, because the company’s new product listing progress is relatively fast, so slightly increase performance expectations), corresponding PE is 23X / 20X / 17X, maintaining the “recommended” level. Risk Tips 1. Policy risks: Frequent policies in the pharmaceutical industry, procurement of drug quantities, price reductions in bidding, introduction of auxiliary drug lists, and DRGs management paths have a short-term impact on drug sales. 2. The risk that the product cannot win the bid: The company’s products are basically prescription drugs and need to be sold in hospitals. If important varieties are missing the standard in some provinces, it may affect sales revenue. 3. Risk of failure of R & D projects: The company has a number of ongoing research projects, including many completely innovative drugs. Generally, the degree of drug innovation gradually decreases, and the risk of R & D failures decreases. 4. The risk of fluctuations in the price of antibiotics and APIs: fluctuations in the prices of APIs may affect the company’s performance