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Jiankangyuan 2020 Q1 report review: Steady operation in 2020Q1, inhalation preparations are expected to yield results
Published Time：
2020-04-27
Performance largely met expectations despite the impact of the epidemic, with a significant decrease in financial expenses. In 2020Q1, despite the impact of the epidemic, non-net profit attributable to the parent company achieved a growth of +1.66%. The epidemic affected the sales of some preparations and health products, but overall performance largely met expectations. The year-on-year decrease of 8.39% in net profit attributable to the parent company is mainly related to the 97% year-on-year decrease in non-operating income (mainly government subsidies) to 1.69 million yuan and the 390% year-on-year decrease in changes in fair value to -11.38 million yuan in 20Q1; in addition, the company's financial expenses in 20Q1 were -26.03 million yuan (-209.7%), mainly due to reduced loan interest and changes in exchange gains and losses. The company holds a 44.81% stake in Lizhu Group. Lizhu Group achieved revenue of 2.505 billion yuan (-3.94%) in the first quarter of 2020, contributing net profit attributable to the parent company and non-net profit attributable to the parent company of 399 million yuan (+1.68%) / 403 million yuan (+22.55%).
The recovery in raw material prices is expected to increase profits. The price of 7-ACA in the company's raw materials and intermediates segment was high in the first half of 2019 (average price 440 yuan/kg), but fell in the second half of 2019. In January and February 2020, it remained in the low price range (average price 350 yuan/kg), dragging down the performance in the first quarter. Affected by the COVID-19 epidemic, the price of 7-ACA has rebounded significantly from the previous level, with a March quotation of 450 yuan/kg (including tax). Considering the global epidemic situation, the price of 7-ACA is expected to remain stable, and is expected to increase profits in 2020.
Comprehensive layout of inhalation preparations, expected to usher in a harvest period. The company has a comprehensive and advanced layout in the field of inhalation preparations. Compound ipratropium bromide inhalation solution and levosalbutamol were approved for marketing in April and September 2019, respectively, and have completed bidding and listing in 21 and 14 provinces, respectively. They are expected to become potential products with a peak value of 5 to 10 billion yuan. The R&D products include budesonide suspension/aerosol, ipratropium bromide inhaler/aerosol, salmeterol fluticasone inhalation powder, budesonide formoterol, etc., and budesonide suspension is expected to be launched in 2020, and is expected to become a blockbuster product of nearly 20 billion yuan.
Profit forecast and valuation rating. Considering the impact of the epidemic, the price increase of raw materials and the launch of blockbuster new inhalation preparations, we have raised the EPS for 20-22 to 0.55 yuan/0.64/0.76 yuan, respectively, with year-on-year growth of 20.0%/16.5%/18.6%. The company's layout of inhalation preparations is comprehensive, and blockbuster products are expected to usher in a harvest period. We maintain a "Buy" rating.
Risk warning: Risks of volume-based procurement of drugs, approval policy risks, and fluctuations in raw material prices.
Source: Founder Securities
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