Jiuzhou Pharmaceutical (603456) 2018 Annual Report Comments: Deduct non-net profit to achieve high growth ENTRESTO volume is rapid

Jiuzhou Pharmaceutical (603456) 2018 Annual Report Comments: Deduct non-net profit to achieve high growth ENTRESTO volume is rapid

Core point of view The company deducted non-net profit in 2018 to achieve high-speed growth, and successfully completed the unlocking of distribution incentives.

Among them, the CMO segment has grown rapidly, Entresto’s order scale is expected to double, and the research project reserves are abundant.

The company’s raw material drug board grew steadily, and the volume and price of central nervous system products rose.

The company deducted non-net profit from high growth and successfully completed the unlocking conditions for equity incentives.

The company realized revenue, net profit, and deducted non-net profit18.

6.2 billion, 1.

57 billion, 1.

80 trillion, ten years +8.

43%, + 6.

46%, +30.

64%, of which the fourth quarter of 2018 realized revenue, net profit, deducting non-net profit5.

9.3 billion, 0.

6.2 billion, 0.

580,000 yuan, +22 a year.

80%, +85.

27%, +90.

04%, achieving rapid growth.

The company’s reorganized equity incentive amortization cost and non-recurring profit and loss net profit increased by more than 200% compared with 2016, and the unlocking conditions for equity incentives were successfully completed.

Entresto drives the rapid growth of the CMO sector and has ample reserves for ongoing research projects.

The company’s CMO segment achieved revenue5.

3.7 billion, +22 a year.

87%, Entresto is expected to achieve revenue of nearly 200 million yuan, doubled before 2017.

As Entresto continues to increase overseas, the company’s Entresto orders are expected to continue to grow at a high rate.

In terms of CDMO research and development reserves, the company is located at the end of 2018 with 35 phase III projects and 270 and 19 clinical trials in phase I and phase II, which are 6,59 more than the end of 2016, respectively.

The rich reserves of CMO projects have laid the foundation for the continued growth and growth of the company’s future performance.

The company’s raw material drug board grew steadily, and the volume and price of central nervous system products rose.
For APIs, the company’s anti-infective, central nervous, non-steroidal, and hypoglycemic products achieved revenue4.

10 billion, 4.

45 billion, 1.

70 billion, 1.

28 ppm, at least -5.

66%, +23.

33%, +9.

89%, + 6.

69%, the overall growth is relatively large and stable.

Among them, the rapid growth of CNS products was mainly due to the increase in prices of Kamasi’s equal products (the gross profit rate of CNS increased).

34%).

With the withdrawal of SMEs under the pressure of environmental protection, the company’s bulk drug business is expected to achieve both volume and price 成都桑拿网 increases. Pollution discharge costs have dragged down performance and the exchange rate contribution rate.

Company sales, management (including R & D), financial expense ratio 1.

72%, 17.

57%, -0.

72%, +0 from 2017.

00, +1.

37, -2.

20 PCTs, of which the increase in management expense ratio was mainly due to the significant increase in sewage charges (28.87 million and 2.05 million yuan in 2018 and 17 respectively), and the decrease in financial expense ratio was mainly due to the contribution of exchange income(13.12 million, -26.30 million).

The company accrued 6.67 million yuan of goodwill impairment in 2018, and the scale of goodwill after impairment is 0. In 2019, it will be light-loaded.

Risk factors: CDMO orders fluctuate, new customer development progress is slower than expected Investment suggestions: Conversion of Entresto orders resumes, volume and price of specialty drug substance business rises, the company deducts non-performance and achieves high-speed growth, combined with 2018 performance to slightly adjust the company 2019-2020The annual EPS forecast is 0.

34/0.

42 yuan (previous forecast was 0.

36/0.

46 yuan), and increase the EPS forecast for 2021 to 0.

50 yuan, with reference to comparable company estimates, giving the company 35 times PE in 2019, corresponding to a target price of 11.

90 yuan, maintaining the “overweight” level.