Huaan Securities: Give Xintian Pharmaceutical a buy rating

2022-01-19Tan Guochao of Huaan Securities Co., Ltd. conducted a study on Xintian Pharmaceutical and released a research report "New Drug Research and Development Superposition secondary development, Innovative Chinese Medicine Ushers in the Harvest Period", this report gives a buy rating to Xintian Pharmaceutical, and the current stock price is 21.92 yuan.

Xintian Pharmaceutical (002873)

Key takeaways:

Chinese medicine policies have promoted the development of the industry, and innovative Chinese medicines have emerged

Since the promulgation of the Law of the People's Republic of China on Traditional Chinese Medicine in 2016, the State Council, the State Food and Drug Administration, the State Administration of Traditional Chinese Medicine, the National Health Commission and other departments have successively promoted the construction of traditional Chinese medicine, and have explored and promoted the development of traditional Chinese medicine through the specification of upstream raw materials, the optimization of talent construction, the strengthening of medical associations, medical insurance support, approval optimization and other aspects of the standardization, and in 2020, the registration classification of innovative Chinese medicines will be listed separately. At the same time, 12 new Chinese medicine drugs were approved and listed in 2021, exceeding the sum of the four years from 2017 to 2020.

The company's mature products are superimposed with innovative pipelines and secondary development, which is highly malleable

The company has a variety of mature products, all of which have a sound system of clinical efficacy literature, and have entered a number of usage guidelines. (1) Heyan? Kuntai capsules and Kunlishu? Matrine gel is the company's heavy products in the field of gynecology, which can effectively treat clinical symptoms related to ovarian function decline, cervical erosions and gynecological chronic diseases such as vaginitis, gynecological products contribute 521 million yuan in revenue, accounting for 69% of operating income, and it is expected to maintain a growth rate of about 30% in 2021-2023. (2) Ning Bitai? Ningmutai capsule has a good effect on the treatment of lower urinary tract infections and chronic prostatitis and other diseases, entered a number of expert consensus and diagnosis and treatment guidelines, and is expected to maintain a growth rate of about 30% in 2021-2023. (3) i.e. Rui? Xia Kushi oral liquid has an exclusive dosage form, which has a good effect on detoxification and detoxification, and is expected to maintain a growth rate of about 20% from 2021 to 2023. The company pays attention to the process and clinical efficacy of modern preparations of traditional Chinese medicine, and continues to invest in research and development, and the secondary development of 4 mature varieties will quickly broaden the commercial value. In addition, the company's three new innovative Chinese medicines, namely Surgical Healing Granules, Longqian Pelvic Shu Granules, and Ku curculene capsules, have completed phase III clinical treatment, respectively, layout of postoperative treatment of the digestive tract, pelvic inflammatory sequelae, bacterial vaginosis, etc., have completed clinical research, the prospect is promising, and the peak sales of new products are expected to exceed 3 billion yuan.

Equity incentives combine equity investment to amplify commercial value

In April 2021, the company issued an incentive plan, which has granted 3.17 million restricted shares to 60 incentive recipients, and if the company's operating income from 2021 to 2023 increases by 27%, 61%, 100% respectively compared with 2020, or 27% year-on-year growth in three years, the proportion of restricted sales can be lifted by 100%. The company pays attention to product efficacy, and the secondary development of products continues to advance, and three innovative chinese medicine drugs will be declared to complete clinical trials. At the same time, the company has a strong sales and promotion capabilities, a comprehensive layout of in-hospital, OTC, Internet and other sales channels, and in 30 provinces, autonomous regions and municipalities directly under the Central Government continue to increase academic promotion efforts, prescription drug products cover more than 13,000 county (district) or above hospitals, including more than 1,400 tertiary hospitals; OTC products cover more than 700 drug chain companies, more than 80,000 stores, incentive objects will be more confident and capable of completing the performance of the three-year doubling plan. At the same time, the company participates in Huilun Biology, gradually laying out the "new space" for the growth of small molecule chemical drugs, and the heavy product injection with civillerista sodium as the first drug approved for the treatment of acute lung injury / acute respiratory distress syndrome in China, the competition pattern is excellent, the growth rate of the four quarters after the listing in 2020 is maintained at more than 160%, and the research, production and marketing capabilities of Huilun Biology will help the company grow in the future.

Investment advice: First coverage, giving a "buy" rating.

We expect the company's operating income from 2021 to 2023 to be 1.004 billion yuan, 1.322 billion yuan and 1.690 billion yuan, respectively, an increase of 33.68%, 31.72% and 27.78% year-on-year, and the net profit attributable to the mother is 102 million yuan, 135 million yuan and 187 million yuan, an increase of 38.13%, 31.98% and 38.13% year-on-year, and we are optimistic about the clinical efficacy of the company's original products from the clinical end to the OTC end coverage. The company's three innovative Chinese medicine drugs have completed the pipeline revaluation brought about by the approval of the third phase of clinical trials, the company's continuous efforts in the modernization of Chinese medicine have brought about the gradual clarity of the results, and the company's equity incentive has brought the enthusiasm of employees to promote. For the first time, we covered, giving the company a "buy" rating.

Risk warning: industry policy risk; product research and development risk; drug sales uncertainty, etc.

A total of 1 institution and 1 buy rating have been given by the stock in the last 90 days; the Securities Star Valuation Analysis Tool shows that Xintian Pharmaceutical (002873) has a good company rating of 3 stars, a good price rating of 2.5 stars, and a valuation comprehensive rating of 2.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)