Shanghai Pharmaceuticals (601607): Industrial profitability of core product group will remain stable

Shanghai Pharmaceuticals (601607): Industrial profitability of core product group will remain stable

Recent situation of the company 杭州夜网论坛We organized a series of non-trading roadshows of Shanghai Pharmaceuticals in Hong Kong and Shenzhen last week. We believe that the company is expected to achieve industrial and commercial two-wheel drive: 1) Industrial sector, continuous optimization of product structure, consistency evaluation to promote cornering overtakingRich structure and effective ability to resist policy risks; 2) Circulation segment, market share is expected to further increase, and profitability will be promoted to remain stable; 3) Research, continuous expansion, combination of counterfeiting, independent research and development and business development are two-wheel drive.

Comment Industry: The product structure is constantly optimized to create core product groups.

The company has selected 60 industrial products as its core varieties.

From January to September, 60 key varieties earned 101.

50,000 yuan, an increase of 31 in ten years.

2%, with an average gross profit margin of 71.

7%.

In terms of large varieties, tanshinone IIA is expected to reach 1.5 billion US dollars in the next 1-2 years; polymyxin B sulfate for injection (exclusive variety) is expected to exceed 500 million in the next 1-2 years; eureklin for injection (a new class of drugs) It was announced last week that it was included in the national medical insurance, which will help promote the breed in the future.

Business: Profitability is expected to remain solid, consolidating the import drug service provider sector.

The market competition in the distribution industry is expected to further deepen. Hengqiang, the leading player, has acquired Kangdele China and Liaoning Medical Trade in the past two years.

The company actively develops the import drug distribution business. The unit price and gross profit of such drugs generally exceed generic drugs, and its customers are sticky.

Among the imported new drugs approved by China in the first three quarters of 2019, Shanghai Pharmaceuticals obtained total distribution rights for 13 varieties.

R & D: Independent R & D and business development two-wheel drive.

Total R & D funding (including capitalization) in 2018.

9 trillion, accounting for industrial income7.

1%.

In terms of independent research and development, the company expects that the small molecule innovative drug Leitengshu (anti-AIDS indication) and the renin inhibitor SPH3127 will attempt to enter phase III clinical trials in 2021 and the second half of 2020, respectively.

In terms of cooperation and expansion, in November 2019, the company cooperated with Shuntian Pharmaceutical on the LT3001 project (a first-class new drug). LT3001 has now started phase II clinical trials in the United States and Taiwan.

It is recommended to maintain the RMB exchange rate for 2019/20 earnings forecast1.

54 yuan and 1.

71 yuan, corresponding to 12.

6% and 11.重庆耍耍网

1% growth.

The current A-share contradiction corresponds to November 2019/2020.

4 times / 10.

3 times price-earnings ratio.

The stock maintains an Outperform rating and 24.

Target price of 50 yuan (corresponding to 2019/20 price-earnings ratio of 15).

9 times / 14.

3 times, 39.

84% upside).

The current contradiction between H shares corresponds to August 2019/2020.

2 times / 7.

4x price-earnings ratio.

H shares maintain an outperform industry rating and 20.

10 Target price reached (corresponding to November 2019/20.

7/10.

5 times price-earnings ratio, 43.37% upside).

The risk R & D progress was less than expected, and brought a lot of procurement pressure.