The growth hormone leader Changchun High-tech stock market was hit by centralized procurement.
On August 17, the Zhejiang Provincial Center for Drug and Medical Devices Procurement (Chinese: 浙江省药械采购中心) issued a draft for the solicitation of comments on the ‘Third Round of Drug Centralized Procurement Document’. The specific procurement procedures have not been announced to the public. The next day, the central purchasing was rumored to include recombinant human growth hormone. As soon as the news came out, Changchun Hi-Tech's stock price fell by the limit within ten minutes.
The business of Changchun High-tech Industry Co., Ltd. (Chinese: 长春高新, 000661.SZ) is mainly based on biopharmaceuticals, supplemented by real estate development, and has formed three major industry development platforms: genetic engineering drugs, biological vaccines, and modern Chinese medicine.
Its subsidiary Jinsai Pharmaceutical (Chinese: 金赛药业), is the company's primary source of profit. In 2021, Jinsai Pharmaceutical achieved a net profit of CNY 3.684 billion attributable to the parent, contributing 98% of the group's net profit attributable to the parent.
Jinsai Pharmaceutical is mainly engaged in the research and development, production and sales of genetically engineered biological drugs. The main products are powder injection and recombinant water injection.
As the first recombinant human growth hormone manufacturer in China, Jinsai Pharmaceutical is the only growth hormone manufacturer in China with a complete product line of powder injections and water injections, accounting for 76% of the growth hormone market.
We expect the company to achieve net profit attributable to the parent company of CNY 5.18 billion, 6.73 billion and 8.28 billion in 2022-2024, a year-on-year increase of 38%, 30% and 23%, compared with the current EPS of CNY12.8, 16.6, and 20.5, corresponding to the current PE value of 16.1, 12.4, and 10.1 times. Overall, we remain optimistic about the Changchun High-Tech stock market.