The income of the three major business lines will not be profitable!Price Pharmaceutical Transformation CDMO and preparation business depend on external hematopoiesis

In the first half of this year, Price Pharmaceutical's operating income reached 4.986 billion yuan, an increase of 16.57%year -on -year; net profit of home mother reached 437 million yuan, a year -on -year decrease of 21.04%

"Investment Times" researcher Yin Yujia

As the international oil prices rose sharply in the first half of the year, companies with overseas business had to bear the increase in international transportation costs. Price Pharmaceutical Co., Ltd. (hereinafter referred to as Price Pharmaceutical, 000739.SZ) is one of them. As a certain market share, and pharmaceutical companies that are mainly based on the intermediate business of raw materials, at the cost side, in addition to the pressure of oil prices, the price of raw materials that rises have further promoted the company's operating costs to rise.

Recently, Price Pharmaceutical issued a half -year report in 2022. Data show that the company's total revenue reached 4.986 billion yuan, an increase of 16.57%year -on -year; net profit attributable to mothers was 437 million yuan, a year -on -year decrease of 21.04%; One percentage point. Among them, the company's revenue in the second quarter was good, reaching 2.884 billion yuan for the first time, an increase of 24.84%year -on -year, which was the highest record of all quarterly performance.

Judging from the performance of the secondary market, the company's stock price also fell from 34.68 yuan per share at the beginning of the year. As of August 10, the company closed at 18.84 yuan/share, and during this period, it fell as high as 45.7%.

It is worth noting that Prove Pharmaceuticals began a share repurchase from May this year, with a total repurchase funds between 200 million to 400 million yuan. As of July 31, the company has used a concentrated bidding method to repurchase the company's shares of 9.19 million shares, accounting for about 0.78%of the total share capital. 200 million yuan. Share repurchase has a limited role in boosting the company's stock price.

So, after the company sets the best quarterly performance record, can the company be able to solve the pressure brought about by the rise in raw material prices at the cost side? Can the layout in the CDMO industry be the next growth curve of Price Pharmaceutical?

Price Pharmaceutical's main accounting data in the first half of 2022

Source: Company Announcement

Rising raw material prices

Price Pharmaceutical's business is mainly divided into three major sections: intermediates, contract R & D and production services (CDMO), and preparation business. Among them, since the listing, the largest proportion of the company's total revenue is the intermediate business of the raw medicine drug. From 2019 to 2021, the business revenue was 6.016 billion yuan, 5.931 billion yuan, and 6.546 billion yuan, respectively; the proportion of total revenue was 83.44%, 75.27%, and 73.20%; the gross profit margin was 24.83%, 21.98%, and 21.98%, and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%and 21.98%. 19.15%. It can be seen that although the gross profit margin has declined in the past three years, the intermediate business of the raw medicine drug is still the company's largest profit.

According to data from the semi -annual report, the company's intermediate business of the company achieved revenue of 3.548 billion yuan, an increase of 13.10%over the same period last year, and the gross profit was 616 million yuan. The gross profit margin was 17.36%, a decrease of 5.66 percentage points from the same period last year. It is not difficult to see that while the business grows, the gross profit margin continues to decline. The company said that this is because the epidemic affects the turbulence of the international political situation, which has further promoted the sharp rise in commodities, especially energy and grain prices, leading to a significant increase in production and operation costs of enterprises.

"Investment Times" researcher noticed that in the first half of this year, the business sector that remained increasing in revenue and increased well, in addition to the intermediate of the raw medicine, also has CDMO. According to data from the semi -annual report, the company's CDMO business achieved operating income of 921 million yuan, an increase of 27.79%year -on -year, and the gross profit was 378 million yuan. The gross profit margin was 41.08%, a year -on -year decrease of 2.28 percentage points.

The rapid growth of CDMO's revenue is inseparable from the loosening of the foreign epidemic environment. As the overseas epidemic control is basically liberalized, Prove Pharmaceutical's overseas market business recovery is better. Overseas sales increased by 43.7%year -on -year, and domestic only increased by 1.5%. In the company's CDMO business revenue, foreign customers account for 91%, and domestic customer business accounts for 9%.

Although the recovery of overseas markets has helped the company's CDMO business revenue rapidly, as international oil prices have maintained high operation in the near future, the cost pressure of logistics and transportation has continued to rise. The repeated epidemic has also put new pressure on the company's daily operation.

It is reported that the CDMO business line of Price Pharmaceutical has three R & D centers, which are located in Hengdian, Shanghai and Boston in the United States. In the first half of this year, Shanghai's epidemic was more affected by the epidemic, and the R & D center in Shanghai was also affected by it.

In the first half of the year, the company's total revenue of the company's total revenue also faced the situation of increasing revenue but a decline in gross profit margin. According to disclosure, the preparation business achieved operating income of 487 million yuan, an increase of 21.17%year -on -year, and the gross profit was 249 million yuan, and the gross profit margin was 51.02%. Among them, the gross profit margin of the business has fallen by 13.58 percentage points compared to 64.60%in the first half of 2021.

In the semi -annual report, the company also said that the sales of drug retail terminals also affected the impact from the epidemic. This is one of the reasons for the decline in gross profit margin. The company's preparation products mainly include anti -infection, cardiovascular and cerebrovascular, mental and anti -tumor. How to establish an integrated and integrated variety of agents and preparations, and the increase in gross profit margin is still the test in front of Price Pharmaceutical. Cash flow pressure

"Investment Times" researcher noticed that the increase in revenue of the company's three major business sectors mainly comes from the driver of project growth.

According to the statistics of CITIC Securities Research Report, the company's CDMO business quotation project was 441, a year -on -year increase of 24%; 405 projects were conducted, a year -on -year increase of 62%. In terms of stages, 203 projects in the R & D stage, an increase of 118%year -on -year, and 202 commercialization stages, a year -on -year increase of 29%. From the perspective of products, there are 48 API cooperation projects, a year -on -year increase of 23%. Of these, 9 projects are in the commercial production stage, 10 projects are in the verification stage, and 29 are in the R & D stage.

The increase in the number of company's preparation business projects from Price Pharmaceutical's transformation and upgrading strategies from "Starting Materials+Registration Intermediates" to "Registration Intermediate+API". The expansion of the company's production line is also to further cooperate with the development of the preparation business.

According to the semi -annual report, in terms of preparation production, the company implemented the industrial chain extension of strategic varieties 1201, YP003, and penicillin products. The new 07101 production line was put into use in July. Half into production. In addition, the two API production lines of KY21024 and KY21027 were added during the reporting period, both of which have been put into use. It is not difficult to see that the growth of the project has further promoted the expansion of Plose industry to expand its production capacity and build a new production line. In the first half of this year, the company's construction project reached 1.017 billion yuan, an increase of 172.59%year -on -year.

From the perspective of cash flow, as of the end of the first half of the year, the net cash flow generated by the company's operating activities was 328 million yuan, an increase of 1.61%year -on -year. However, according to the semi-annual report, the net cash flow of investment activities was -399 million yuan, of which the cash of fixed assets, intangible assets and other long-term assets was as high as 374 million yuan. The net cash flow of fundraising activities was -128 million yuan, of which the cash inflow received by the loan was 669 million yuan, and the cash outflows of fundraising activities reached 796 million yuan. In the first half of the year, the company's net cash increase was -178 million yuan. It can be seen that Plose Pharmaceutical's expansion of production, and the new production line has caused the company's cash flow pressure to be inevitable.

According to the semi -annual report, the company's research and development costs were 282 million, an increase of 37.4%, accounting for 5.66%of operating income. Judging from the growth of the number of R & D terminals, the company now has 93 R & D personnel, of which 45 doctors and 207 masters. The number of R & D personnel of the company is also growing. By 2025, the company's research and development team formed about 2,000 people. The expansion of the R & D team is also a manifestation of the company's dedication to the development of CDMO and preparation business. Under the company's overall expansion, cash flow pressure will always exist in the short term.

"Investment Times" researcher also noticed that as of June 30, the company's asset -liability ratio also increased to 51.69%.

On July 30, Price Pharmaceutical also disclosed the announcement of the promotion of the subsidiaries. The announcement shows that the company held the tenth meeting of the eighth board of directors on March 8, 2022 and March 31, 2022 and the 2021 annual shareholders' meeting. Financial institutions' financing provides financing guarantees of no more than RMB 5.1 billion. The company has guaranteed a total of 355 million yuan for the two subsidiaries Zhejiang Prosenal Pharmaceutical Co., Ltd. and Zhejiang Hengdian Plot Import and Export Co., Ltd.

As of this guarantee, the total amount of the guarantee amount of Prove Pharmaceutical and its subsidiaries was 3.258 billion yuan; the company's guarantee balance to the subsidiaries was 2.367 billion yuan, accounting for 46.78%of the company's recent audited net assets. From the company's guarantee, it is not difficult to see the dependence on external loans under the expansion of Price Pharmaceutical.

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