East China Medicine (000963): Minutes of the 2019 Mid-term Strategic Meeting
Company dynamics Company status We recently invited company leaders to participate in CICC’s second half of 2019 investment strategy meeting.
We believe that the company is actively developing second-tier varieties and increasing R & D to promote new product listings, in order to resist the risks of volume purchase policies.
Comment on the industry: the growth of second-tier varieties is bright, and the grassroots channels have further developed.
We expect Bailing Capsules to maintain 10% + growth in 2019, mainly due to channel sinking and retail channel development (currently, retail channel revenue accounts for about 15% of Bailing Capsule revenue).
Diabetes line, acarbose. We expect to maintain a growth rate of more than 20% in 2019. The company reserves a large amount of raw material drug production capacity to cope with the volume purchase policy. We expect to gradually put Jiangdong Phase II into production at the end of next year; the second-line variety piroglitazoneMethylbisphenol’s 2018 revenue was 1.
500 million US dollars (100% + annual growth rate), is expected to become a large variety of 1 billion US dollars in the future.
Immune line products (the competition pattern in this field is expanding and stabilizing) We expect to maintain a sustainable growth of about 30%.
In addition, tintinbutin and daptomycin will also become growth drivers.
Medical Beauty: Become one of the future strategic directions.
The company acquired a 100% stake in Sinclair, a British medical beauty listed company, in 2018, and consolidated from November 2018.
We expect Sinclair’s revenue growth rate to reach 50% this year. Europe, Taiwan, Brazil and other places have entered the company’s important markets.
We expect Sinclair to turn a profit next year.
At present, the company is actively preparing to start the company’s 佛山桑拿网 corporate release in China.
In addition, the company’s hyaluronic acid business of South Korea’s LG company increased by about 6% in 2018, and the growth rate has improved, which has led to fierce competition in the domestic low-end hyaluronic acid market.
Currently the company is actively launching new products, and we expect revenue to accelerate this year.
R & D: Build a multi-mode R & D system.
At present, the company has formed a new drug research and development model combining “independent R & D + cooperative entrusted development + external mergers and acquisitions and product authorization transfer”.
We estimate that R & D expenses will increase by 30% -40% annually in 2019, reaching a scale of 9 billion to 1 billion.
We expect that new products such as liraglutide, caspofungin injection, anastrozole tablets, compound omeprazole sodium bicarbonate capsules, sitagliptin dimethylbisphenol tablets, etc. may be marketed in the past two years.
According to the company announcement, there are currently three innovative drug products under development (TTP-273, Mehuatinib, HD 118).
It is estimated to maintain the 19/20 forecast EPS of RMB1.
92 yuan and 2.
35 yuan, corresponding to an annual increase of 24% and 22%.
The current total corresponds to a 19/20 market surplus of 12.
8x / 10.
5x, maintain “Outperform” rating and maintain target price of RMB36.
52 yuan, corresponding to 19/20 market surplus of 19.
0x / 15.
5 times, there was 48% room for growth earlier.
The price of risky core products fell more than expected, and products under development fell short of expectations.