Sincerity Pharmaceuticals (603811): Slight increase in local product structure continued to optimize

Sincerity Pharmaceuticals (603811): Slight increase in local product structure continued to optimize
Event: The company announced the third quarter report of 2019: the first three quarters achieved operating income4.99 ppm, an increase of 24 in ten years.92%; net profit attributable to mother is 9916.480,000 yuan, an increase of 39 in ten years.31%; net profit of non-attributed mother is 9017.180,000 yuan, an increase of 27 in ten years.50%; operating cash flow1.80 ppm, an increase of 98 in ten years.29%. Q3’s revenue growth rate was subdivided, and profitability continued to be optimized.In Q3, the realized income and net profit attributable to mothers were 1, respectively.60 ppm, 30.89 million yuan, the annual growth rate was 8.19%, 18.06%, compared with the first half of the growth rate slightly overlap, mainly due to the decline in intermediate and other businesses.In terms of different products, Q1-Q3 preparation products revenue3.64 ppm, an increase of 50 in ten years.33%, maintaining a high growth rate; revenue from APIs1.2 billion, down 5 every year.7%; Intermediate and other products realized revenue of 3241.90,000 yuan, down 31 every year.34%.In terms of treatment areas, joint products (mainly the company’s core product glucosamine hydrochloride) have achieved revenue1 in the two major products1.55 ppm, an increase of 40 in ten years.11%; Diuretics (mainly torasemide) achieved revenue of 8519 million, an annual increase of 12.69%.On the profit side, the company’s overall gross profit margin has risen by more than 13%.38 percentages reached 72.77%, mainly because the company further promoted the optimization of product structure brought about by the integration of pharmaceutical preparations and raw materials.Selling expense ratio increased by 9.1 to 38.4%, mainly because the company deeply cultivated the sales network layout, strengthened the company’s pharmaceutical promotion, market development, market management, and market maintenance, etc .; the management expense ratio (including research and development) decreased by 0.2 total to 10.6%, mainly due to the natural increase in management expenses and R & D expansion caused by market expansion.Taken together, the company’s net profit margin increases by 2 every year.1 to 19.9%, stable growth in profitability. The company’s core product, glucosamine chloride, has a large market space, rapid product growth, and continuous deepening of its marketing network, driving the company’s performance to accelerate growth.As the company’s core product, glucosamine hydrochloride replaces other anti-inflammatory and analgesic drugs, repairs the degenerative spine, and fundamentally inhibits the pathogenesis of osteoarthritis. It can improve the treatment effect of arthritis and is small.Glucosamine hydrochloride is widely used in European and American countries to treat early arthritis and maintain joint health. It is a major component of well-known joints, bone health products such as MoveFree and GNC.The proportion of the domestic population over the age of 60 was 17 in 2017.3%, well above the world average of 12.3%, more than 200 million people, and increasing year by year.As the aging problem continues to worsen, arthritis patients will increase exponentially, and the cardiovascular glucosamine market has a bright future. According to estimates from the South, the market growth rate is not less than 20%. Excluding industry factors, the company vigorously promotes core products, continues to optimize marketing channels, through selected regional distributors, continuously does deep academic promotion and corporate branding of fine products, increases sales of high value-added preparation products, and the company’s key varieties of chlorineVolumes and prices of products such as glucosamine preparations rose.At the same time, the company initially acquired Fujian Huakang Pharmaceutical Co., Ltd. in October 2018, allowing the company’s main products to be transferred to the upstream and downstream industrial chains, which is conducive to reducing production costs and enhancing market competitiveness. We think the company is expected to fix it further.The company’s current 19-year PE estimate is 24 times, which is at a low level in the pharmaceutical market. It is estimated to be slightly repaired from the first half of the year. Based on the following reasons, we believe that the company has the potential to further repair the incremental:(Solid), is in the heavy volume phase, and is expected to bring considerable revenue to the company for three years in the future; (2) the company’s preparations and APIs are integrated, which has advantages in the entire industrial chain and has strong profitability; (3) the company’s technology reservesRich, with 69 drug production approval numbers, 4 national new drug varieties, including 3 second-class new drugs and 1 fourth-class new drug, covering multiple fields, laying the cornerstone for the company’s future growth; (4) the company has abundant cash flowExcellent financial indicators; (5) The company’s core products are mainly APIs and OTC drugs, which are less affected by policies. Investment suggestion: It is expected that the company’s revenue for 2019-2021 will be 7 respectively.10,000 yuan, 8.9.6 billion, 11.29 trillion, with growth rates of 28%, 28%, and 26%; net profit was 1.3.8 billion, 1.9 billion, 2.500,000 yuan, the growth rate is 42%, 38%, 32%; the budget revenue is 1.16.1.59 and 2.10 yuan, the current expected corresponding estimates are 24.3X, 17.6X, 13.4 times.We believe that the company’s core product, glucosamine 北京桑拿洗浴保健 glucosamine, is benefiting from marketing reforms and other factors. It is in the heavy-duty period. The integration of APIs has significant competitive advantages. The cash flow and other financial indicators are excellent. It has gradually improved and maintained the investment grade of Buy-A. Risk warning: ammonia sugar sales fall short of expectations; product competition is likely to increase profitability.


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