East China Pharmaceutical (000963): Main business meets expected R & D supplement

East China Pharmaceutical (000963): Main business meets expected R & D supplement

1-3Q2019 results are in line with expectations. East China Pharmaceutical announced 1-3Q2019 results: operating income of 276.

30,000 yuan, an increase of 19 in ten years.

1%; net profit attributable to parent company22.

10,000 yuan, an annual increase of 22.

3%, corresponding to profit 1.

26 yuan.

Performance is in line with our expectations.

Development trends Industrial growth remains strong.

In the first three quarters of 2019, China-US East China revenue was 83.

9 trillion, an increase of 30 in ten years.

0%, net profit 18.

500 million, an increase of 27 in ten years.

0%, the net profit of the subsidiary accounted for 83% of the total net profit of the parent.

7%.

In the first three quarters of 2019, we expect Bailing capsule revenue to increase by 16% annually; acarbose revenue will increase by 32% annually.

Pioglitazone metformin continued to grow by 120%, which was replaced by the 2019 National New Medical Insurance Directory.

Pyridinaldehyde bufen grows 100% annually.

Revenue from transplantation products grows 30% annually, and revenue from digestion products grows 20% annually.

The company announced in October that it would abandon its acquisition of Zoli Pharmaceuticals.

Medical Beauty continues to explore new markets.

In the first three quarters of 2019, the pharmaceutical business, medical beauty and other businesses totaled 192 revenues.

4 ‰, an increase of 14 in ten years.

9%.

In the first three quarters of the pharmaceutical business, revenue increased by 15% each year, and profits increased by 20% each year.

In the first three quarters of 2019, Sinclair has completed listing registrations in five countries and regions. The key product Ellansé (injectable long-acting microspheres) has completed clinical trials in China. It has strategically cooperated with the American R2 dermatology company and has begun to launch its original innovation.Related clinical research work of F1 frozen freckle medical device F1 in China.

R & D funding increases.

In the first three quarters of 2019, R & D expenses7.

10,000 yuan, an increase of 52 in ten years.

8%.

We expect R & D spending in 2019 to exceed $ 1 billion, with an annual growth of 40 +%.

Oncology line: Mevatinib is in clinical phase II, and we expect to start clinical phase III in the second 深圳SPA会所 half of 2019.

Letrozole tablets were submitted for market application in mid-October.

Diabetes line: liraglutide has now started a national multi-center phase III clinical trial and is expected to apply for production in 2020.

TTP-273 has entered Phase I clinical trials, and Phase II clinical trials are expected in 2020, with production declared in 2021.

HD-118 has entered Phase I clinical trials and is expected to commence Phase II clinical trials in 2020.

We expect that caspofungin injection, anastrozole tablets, compound omeprazole sodium bicarbonate capsules, and sitagliptin dimethylbisphenol tablets are expected to receive marketing approval in the first quarter of next year.

Earnings forecast and forecast maintain 19/20 forecast EPS is RMB1.

92 yuan and 2.35 yuan, corresponding to an annual increase of 23.

6% and 22.

2%.

It currently corresponds to 2019/202013.

1x / 10.

7 times price-earnings ratio.

Maintain Outperform industry rating and target price of RMB38.

46 yuan, corresponding to 20.

0 times 2019 P / E ratio and 16.

4x 2020 price-earnings ratio, 53% more upside than before.

The price of risky core products fell more than expected, and products under development fell short of expectations.