I. Company Profile

Yao Bo is a leading pharmaceutical industry in China. The company was founded in 1970 and listed on the Shanghai Stock Exchange in 2002. Its products include six series, including molded bottles, brown bottles, ampoules, controlled bottles, butyl rubber stoppers and plastic bottles with aluminum-plastic lids, with specifications of more than 1000. It can provide the whole service of "bottle+stopper+cap" for pharmaceutical enterprises. In cooperation with Shanghai Pharmaceutical Group, Guangzhou Pharmaceutical Group and Harbin Pharmaceutical Co., Ltd., the company's market share of molded bottles is over 80%, and it is also one of the approval documents of two domestic neutral boron-silicon molded bottle packaging materials companies. The company's management shareholding platform (Zibo Xinlian Investment) holds 7.25% of the company's equity. At the same time, there is also an incentive fund system, with various incentive measures in place and sufficient motivation for performance release.

Judging from the operating income of 20 19 products, molded bottles are the largest source of the company's income, accounting for 52.24%. Brown bottle accounts for 29.8%, butyl rubber stopper accounts for 8.835, tube bottle accounts for 6.23%, and the other two kinds account for a relatively small proportion.

Second, industry changes.

1. Industry scale: Medical packaging materials refer to inner packaging materials that are in direct contact with drugs. In recent years, with the improvement of China residents' living standard and health concept, and the increase of government investment in medical and health undertakings, the pharmaceutical packaging market in China has ushered in rapid growth. In 20 18, the market size of China pharmaceutical packaging industry reached106.8 billion yuan, an increase of 10.6% over the previous year, which was higher than the global growth rate as a whole.

Among them, medical glass is an important part of medical packaging materials, which is often used to package injections, infusion drugs, oral preparations, health care products and so on. In the past five years, the market scale of medical glass in China has generally shown an upward trend, reaching 265,438+094 million yuan in 2065,438+08, accounting for about 20% of the medical packaging industry.

Because of its long-term safety, medical glass is widely used in the field of medical packaging, and has always been regarded as an essential packaging material for water injection and freeze-dried powder injection, which has an irreplaceable position. Medical glass can be divided into soda-lime glass, low borosilicate glass and medium borosilicate glass according to the water resistance from low to high.

At present, low borosilicate glass and soda-lime glass are still the main medical glasses in China. According to "China Medical Glass Packaging Deep Investigation and Investment Strategy Report (20 19 Edition)", the amount of boron and silicon in domestic medical glass in 20 18 years was only 7-8%. However, because the United States, Europe, Japan and Russia all require that all injection preparations and biological preparations be packed with neutral borosilicate glass, medium borosilicate glass has been widely used in foreign pharmaceutical industry.

2. The consistency evaluation policy for injections was gradually promoted, and the medical glass was upgraded to medium borosilicate glass.

20 17, 10 In June, the general offices of the General Office of the Central Committee of the CPC and the State Council jointly issued the Opinions on Deepening the Reform of the Examination and Approval System and Encouraging the Innovation of Medical Devices, which clearly stated: Re-evaluate the listed drug injections, and strive to basically complete them in about 5 to 10 years. 20 17,110/0. In October, CDE issued the Technical Requirements for Conformity Evaluation of Listed Chemical Generic Drugs (Injection) (Draft for Comment), which kicked off the conformity evaluation of injections, and proposed that the packaging materials and containers of drugs for direct contact with injections should meet the packaging standards promulgated by the General Administration. Low borosilicate glass and soda lime glass are not recommended. 20 19, 10 In June, NMPA issued the Technical Requirements for Consistency Evaluation of Quality and Efficacy of Generic Drugs for Chemical Injection (Draft for Comment) again, proposing that the quality and performance of packaging materials and containers for injection should not be lower than that of reference preparations, so as to ensure the consistency of drug quality and reference preparations.

At present, foreign pharmaceutical companies generally choose neutral borosilicate glass as the material of medical glass. Except for a few domestic joint ventures, most of the glass bottles used for drug packaging are ordinary soda-lime glass and low borosilicate glass. The popularization of consistency evaluation of injections will open the way to upgrade the pharmaceutical glass industry in China, and gradually transform from soda-lime glass and low borosilicate glass to medium borosilicate glass.

Third, business analysis.

1. Molded bottles: This company is the leader of molded bottles in China. At the beginning of listing, the domestic market share of molded medical glass bottles reached more than 70%. Since the company successfully acquired Mianzhu Chengxin Bo on 20 14, it has integrated the national market of penicillin bottles from south to north, relying on the technology and capacity advantages of the headquarters and the cost advantages of Baotou Kangrui. It is estimated that the current market share has increased to more than 80%, and the leading position in the industry is stable.

2. Brown bottles: It is conservatively estimated that the market share is above 50%, of which the export ratio is around 70%. The company's brown bottles have gained a good reputation in the middle and high-end market, especially in the health care products market and cosmetics market. From 20 15 to 20 18, the average price of brown bottles rose sharply, and the company's new kiln capacity increased. Due to the rising price of raw materials, the production cost is relatively stable. The company added a brown bottle workshop in Mianzhu, which will further release the company's production capacity and help the company to further increase its market share.

3. Bottle control: Because bottle control can outsource glass tube processing, the threshold for bottle making is lowered to a certain extent, so there are relatively many competing enterprises, and the company is still a relatively large-scale enterprise in bottle control.

4. Medium borosilicate glass bottle: Yao Bo, Shandong Province is the first enterprise in China and the sixth in the world to master the production technology of neutral borosilicate glass (Grade I glass) molded bottles, and has basically achieved import substitution.

Among them, the medium borosilicate molding bottle: because the medium borosilicate glass has high viscosity after melting, it is not easy to discharge bubbles, so it is difficult to produce. With the advantages of bottle-making technology, the company put the medium boron silicon bottle-making products on the market in 2006.

The company announced in June 20 19 that in order to meet the growing market demand, the company plans to invest 398 million yuan to expand the first-class mold bottle workshop, including 207 million yuan to build the first-class mold bottle workshop, and 1.9 1.965438 million yuan to build the supporting three-dimensional finished product warehouse, raw material warehouse, office building and shift work. After the project is put into production, it is estimated that the revenue in 2026.5438+0 will be 65.438+0.65 billion yuan, and the total profit in 2026.5438+0 will be 44.9 million yuan. With the project put into production one after another, the cost sharing of the workshop will gradually decrease and the annual profit will gradually increase.

Among them, medium boron silicon controlled bottles: at present, domestic enterprises mostly buy medium boron silicon glass tubes from foreign-funded enterprises such as short and NEG, and then cut and manufacture medium boron silicon controlled bottles. The company also actively develops the drawing technology of medium silicon boron tube. If the research and development is successful and the quality is stable, it will help the company to use medium boron silicone to control bottles for personal use, thus increasing the gross profit margin.

5. Butyl rubber bottle stopper: In addition to medical glass, the company also provides all-round services for bottle stoppers and lids for pharmaceutical companies. Among them, natural rubber stopper was banned nationwide in 2004 due to many bad problems, and butyl rubber stopper became the only drug rubber stopper used in China. Butyl rubber plugs were laid out in advance in 2003 and put into sale the following year. In 20 18, the sales volume reached 4.02 billion pieces, accounting for about 10% of the national market share, making it one of the largest sales enterprises in the industry.

6. Customer advantage: The company has more than 4,000 customers, including more than 3,000 pharmaceutical companies, and has formed good and stable cooperative relations with well-known enterprises at home and abroad such as Sanofi-Aventis, Pfizer, Novartis, Boehringer Ingelheim, ge, Hengrui, Changjiang, Qilu, Tianqing, Fosun Pharma Group, China Resources Group and Sinopharm Group.

7. Actively expand foreign markets: the company exported to Europe, the United States, Russia, Japan, South Korea, Southeast Asia and other countries and regions, and its export revenue rose from 473 million in 20 14 to 679 million in 20 18, accounting for more than 25% of the total revenue in the last five years. In the future, the company plans to set up sales offices in the European Union, the Middle East, South Africa, North America, Brazil and Southeast Asia to gain more overseas sales increments.

Fourth, financial analysis.

1, with strong growth ability. In recent years, the company's performance has grown rapidly, and the income growth rate has remained at10-15%; Since 20 16, the growth rate of net profit returned to the mother has exceeded 30%, which is faster than the growth rate of income. The main reasons are: 1) the product structure has been optimized, and the proportion of high-margin first-class mold bottles and brown bottles has been increasing; 2) The complete product line and industrial chain pattern have formed obvious advantages of scale production, which are reflected in the reduction of procurement and management costs, the improvement of gross profit margin and the basically flat or slightly reduced expense ratio; 3) With the incentive measures in place, the company has sufficient motivation to release its performance.

2. Profitability has been gradually improved. The gross profit margin of the company in 20 19 was 36.9 1%, up by 0.92 percentage points year-on-year. Since 20 15, the gross profit margin has increased for five consecutive years, and the company's net profit margin has also continued to improve. Behind the increase in gross profit margin is the company's multiple moats, which are sustainable. It is embodied in the following aspects: firstly, the characteristics of molded bottle rails and high industry concentration make the company have certain pricing power; Second, the company's excellent cost control ability, continuous improvement and optimization of production technology, improve production efficiency and product qualification rate; Third, the proportion of high-end and high-threshold products such as the company's first-class bottles continued to increase.

3. Good cash flow. The company's long-term net cash ratio exceeds 1, net operating activities far exceed net profit, and the company's cash withdrawal ability is quite strong.

Verb (abbreviation of verb) evaluation

According to the forecast of market institutions, the company's net profit in 2020 is about 586 million yuan, and the company's current market value is 35.7 billion yuan, corresponding to PE valuation of about 60 times. The expected net profit growth rate of the market is 27.74%, corresponding to PEG=2. 1. No matter from the perspective of PE or PEG, the company's current valuation is overvalued. At present, there are more incremental funds in the market, and the trend is still there in the short term, but we should guard against the withdrawal of funds and the high price.