This article is excerpted from the research report of Tianfeng Securities, "Finding the "invisible champions" in A-share series one: what are the targets in the market value of tens of billions of dollars that have been overlooked?
1. Why do we need to find "hidden champions"?
CSI 300 performance trend in recent years, the value of the blue chip style market in the past few years has been many times a sustained rise. 2020, the value of the blue chip short-term investment opportunities difficult to grasp, the medium and long term endogenous power is relatively insufficient.
In the current context, compared with the "obvious champion" value blue chip companies that have continued to rise over the past few years, we believe that investing in "invisible champions" that are relatively cheap in valuation, stable and upward in fundamentals, and in the leading position in the segmentation of the race track, and have a certain degree of market pricing power, is a kind of "invisible champion" target, which is a kind of "hidden champion". We believe that investing in relatively cheap valuations, stable and upward fundamentals, leading positions in niche tracks, and certain market pricing power in the "invisible champions" is a higher risk-return ratio investment strategy.
2. What is a "hidden champion"?
In what sectors? --Traditional or emerging?
These are the most important factors in the development of the market, and the most important are the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market, the development of the market and the development of the market. The business focus of the hidden champion, the market size of the segment is usually small, and its own size is mostly small and medium-sized enterprises.
Most of the industries in which hidden champions are located are concentrated in the manufacturing and chemical industries, and the dominant industries of hidden champions in different countries have their own focus. China's hidden champions are mainly located in the Yangtze River Delta and the Pearl River Delta, which is the right time to develop.
The A-share "hidden champion" screening three criteria: ranked in the world market or the country's top three, rarely known to the outside world, annual revenue of less than 20 billion yuan; four characteristics: business focus, resource advantages (R & D and innovation capabilities), steady growth in performance, and market share leader.
3. Screening Criteria for Invisible Champions
4. First List of Invisible Champions
Guangzhou Restaurant : Cantonese moon cake leader & frozen food leader
Sailun Tire : mining tires global leading supplier
Boshi shares : petrochemical automation leader in the back end of the & industrial robotics
AnChe Inspection ：Motor Vehicle Integration Inspection Leader
Jincheng Pharmaceuticals ：Cephalosporin Intermediates & Glutathione Leading Supplier.
4, enterprise details
1) Guangzhou Restaurant: Cantonese moon cake leader & frozen food leader
Guangzhou Restaurant Group Co., Ltd. was founded in 1935, and now the company is listed on the SSE in June 2017 (Guangzhou Restaurant. 603043). The company has developed into a large-scale food manufacturing and catering service group with deep Lingnan characteristics, ranking first in the country in the production and sales of mooncakes continuously from 2012 to 2018, and is the leading manufacturer of Cantonese mooncakes, while vigorously developing frozen food to form a new profit growth point.
The business focuses on "Cantonese flavor", and is based on Guangdong in terms of catering and food to open up the domestic and international markets.
① "Catering brand", deep-rooted in Guangzhou. The company started in the catering business, its main self-operated Cantonese Chinese restaurant "Guangzhou Restaurant", "Tianjipin", and the cultivation and development of "Xixidi", "Good shape", "Star Shade City" and other specialty restaurant brands, but also developed the "Manchu feast", "five dynasties banquet It has also developed famous ancient banquets such as "Manhan Grand Feast", "Five Dynasties Banquet" and "Nan Yue Wang Banquet". In 2019, the Company signed the Cooperation Framework Agreement for Tao Tao Ju, aiming to promote the resurrection and re-establishment of old brands belonging to the Guangzhou Municipality. The company's catering sales model is currently based on direct management, with 19 directly-managed catering stores, most of which are located in Guangzhou;
② "food to create scale", to domestic and international. The company's food manufacturing business to mooncake series products, frozen food, preserved meat, cake, bread, pastry and other categories as a supplement, with "Likoufu", "Autumn Wind", "Crisp" and other well-known brands. We have famous brands such as "Likoufu", "Autumn Wind" and "Crisp". The segment mainly adopts direct sales and distribution modes, including its own chain stores, e-commerce, supermarkets, special channels, dealers and franchisees. Currently, the Company and its subsidiaries own more than 200 bakeries (including franchises). Among them, "Likoufu" is the main brand of the company, with many chain stores and distribution points in the city and general distributors in many provinces, cities and autonomous regions in China, covering eight series of products, including Mid-Autumn Mooncakes, Frozen Snacks, Cantonese Preserved Meat, Lotus Seed Paste Fillings, Bread and Cakes, Safe Lunch Boxes, Snacks, and Dragon Boat Festival Rice Dumplings, etc., which are well-sold domestically and exported to the European Union and the United States, Canada, Australia, New Zealand and other countries and regions. The company's products are sold well in China and exported to the European Union and other countries and regions such as the United States, Canada, Australia, New Zealand and so on.
Old innovative brand reputation for years, production and sales than to play full still in short supply.
The company's production and sales ratios have remained high year after year as the company continues to increase its brand influence and expand its sales volume, thereby boosting its production volume. The brand "Guangzhou Restaurant" has a high recognition among the consumer groups in the catering industry and enjoys the reputation of "the first one in Guangzhou", and has been selected as one of the fourth batch of municipal intangible cultural heritage list in Guangzhou for its "Cantonese cuisine cooking skills". The company was recognized as "the first restaurant in Guangzhou" in 2006. The company was awarded "China Famous Brand Product" in 2006; its production and sales volume ranked first in China for 7 consecutive years from 2012 to 2018, and it was honored as "the first Chinese mooncake" by China Hotel Association; it was certified as a high-tech enterprise in 2017, and was recognized as "the first Chinese mooncake in Guangzhou" in 2019. The company was certified as a high-tech enterprise in 2017 and recognized as a "key agricultural leading enterprise in Guangdong" in 2019. Up to now, the company has cultivated six generations of Cantonese cuisine culinary skills inheritors and nearly 100 Cantonese cuisine masters and craftsmen, who have participated in culinary competitions on behalf of the country, province and city for many times with honors. The chef group has been entrusted by the Overseas Chinese Affairs Office of the State Council for many consecutive years to visit Latin America, Oceania, Northern Europe and other places on behalf of the country as culinary ambassadors for culinary exchanges and to promote the culture of Cantonese cuisine;
To satisfy the demand of consumers, the company's production capacity has been continuously expanding. The company has set up food manufacturing production bases in Panyu, Meizhou, Maoming, Xiangtan, etc. As of the 2018 annual report, the output of the company's mooncake series products was 11,600 tons, and the sales volume was 11,500 tons, with a production-sales ratio of 99.49%; the output of quick-frozen food products was 20,600 tons, and the sales volume was 20,200 tons, with a production-sales ratio of 98.09%. According to the company's announcement in March 2019, after expanding production by 7,040 tons, there are still not less than 2,000 tons/year of mooncake production capacity and not less than 6,000 tons/year of filling production capacity under construction.
Multi-year stable growth in performance, profitability steadily improved. 2011 to 2018, the company's revenue rose from 1.166 billion yuan to 2.537 billion yuan, a CAGR of 11.75%, or 2.18 times; net profit from 148 million yuan to 384 million yuan, a CAGR of 14.56%, or 2.59 times; the net profit from 148 million yuan to 384 million yuan, a CAGR of 14.56%, or 2.59 times; and the net profit from 384 million yuan to 2.18 times. Gross profit margin benefited from the scale of production and raw material cost control to reduce the cost to achieve continuous improvement, 54.66% in 2018, an increase of 7.38 pct compared with 2011; net profit margin for many years showed a steady increase, 15.11% in 2018, an increase of 2.39 pct compared with 2011. 2019, the company opened up the online channel, double one day cat flagship store single store, the company's net profit increased by 2.18 times. In 2019, the company opened up online channels, with the sales of the flagship store of Double Eleven Cat rising 138% year-on-year, the sales turnover of Jingdong channels increasing by 100% year-on-year, and the sales of Jingdong channels increasing by 700% year-on-year, and in the ranking list of Jingdong self-owned noodles, the company jumped to the third place in the country. on December 17, the company also reached a cooperation with Jingdong Supermarket, so that the old food products under its banner could ride on the e-commerce express train,**** with the promotion of the realization of a significant increase in sales in 2020. The company's sales are expected to grow significantly year-on-year in 2020.
2) Sailun Tire: A Leading Global Supplier of Mining Tires
Sailun Group was founded in Qingdao in 2002 and listed on the SSE in 2011 (Sailun Tire, 601058), and is the first privately-owned A-share-listed tire company in China. The company is mainly engaged in the research, production, marketing and service of tires, and is the world's leading supplier of mining tires.
Deep-rooted in the tire industry, the company is committed to "making a good tire". The company's tire products are mainly divided into semi-steel radial tires, all-steel radial tires and off-highway tires, which are widely used in the field of cars, light trucks, large buses, trucks, special vehicles, etc.; the recycling products mainly include retreaded tires, tread rubber, rubber powder, steel wire, etc., which are respectively used in the field of tire replacement, old tire retreading, the manufacture of reclaimed rubber, high-quality steel production and so on; the main business of tire trading is to adopt a market-oriented operation mode, purchasing and selling tires, and to provide the best quality tires. The tire trading business mainly adopts the market-oriented operation method, purchasing tire products from other companies and selling them to the outside world.
Internationalization and going global is an important strategy that the company has always insisted on. In terms of channels, more than half of the company's products are exported overseas, selling well in Europe, the United States, Asia, Africa and other more than 100 countries and regions. Expanding overseas sales scale thanks to the company's globalization of the marketing system is sound and perfect, the company has formed to North America, Africa, Southeast Asia, Europe and other sales companies and service centers as the focus, to other areas of the sales office for the auxiliary sales network covering the world; talent, the company continues to R & D team and the management team to introduce overseas experts, and at the same time, from the production of workers in the position of training and selection of talented people to send to the production of the company. In terms of talents, the company continuously introduces overseas experts into the R&D team and management team, and at the same time cultivates and selects outstanding talents from the production workers' positions to be sent to overseas for further study, so as to cultivate internationalized talents from the company.
The company builds advantageous barriers from two aspects:
① Build industry leadership from technology. Since its establishment, the company has attached great importance to technological innovation, and invested a large amount of R&D expenses to support independent innovation. The company is the scientific research demonstration base of "National Rubber and Tire Engineering and Technology Research Center". As of the end of 2018, the company owns about 253 patents and has participated in the formulation or revision of 88 national and industrial standards. The company is the first advanced technology enterprise in China to develop RFID smart tires, which are tires with "electronic ID cards", and the first enterprise in the industry to adopt information technology to control the whole production process. In recent years, the company has been approved as "National Pilot Demonstration Enterprise of Intelligent Manufacturing", "National Pilot Demonstration Enterprise of Industrial Internet", "National Demonstration Enterprise of Internet of Things Integration, Innovation and Convergence Application "
Many years of steady growth in performance and profitability. 2010 to 2018, the company's revenue rose from 4.050 billion yuan to 13.685 billion yuan, with a CAGR of 1.8 billion yuan and a CAGR of 1.8 billion yuan. 13.685 billion yuan from 2010 to 2018, with a CAGR of 16.44%, or 3.38 times; net profit rose from 113 million yuan to 668 million yuan, with a CAGR of 24.84%, or 5.90 times; gross profit margin in 2018 was 19.82%, an increase of 11.47 pct compared with 2010; net profit margin in 2018 was 4.80%, an increase of 2.00 pct compared with 2010; overall, the company's overall performance has been growing steadily for many years. On the whole, the company's production and sales of all-steel tires and semi-steel tires have been growing steadily, gross profit margin has been improving, and off-highway tires have achieved significant breakthroughs in production, sales and channels, and profitability has been improving. According to the 2019 performance report, the company continues to benefit from market development and raw material prices are at a low level, while the new capacity of the Vietnam plant is running well, in 2019, the company realized revenue of 15.1 billion yuan, an increase of 10.34% year-on-year, and net profit of 1.2 billion yuan, an increase of 79.60% year-on-year.
3) BOSHI: petrochemical back-end automation leader & industrial robotics leader
Harbin BOSHI Automation Co. The company is mainly engaged in the research, production and marketing of large-scale intelligent complete sets of equipment and environmental protection process equipment, and provides value-added services related to the equipment. It is the domestic petrochemical and chemical reprocessing equipment leader in the field, and the world's leading technology in the field of high-temperature mine heat furnace robot.
Based on the traditional petrochemical back-channel automation field, grasp the emerging robotics opportunities. Over the years, the business continues to grain, food, beverages, building materials, ports, feed and other areas with fully automated weighing and packaging needs to expand; petrochemical back-channel automation technology accumulation for the company's business to high-end industrial robotics products homologation extension to lay the foundation for the industry's top in a number of areas to form a new growth point in the performance of the:
① in the field of metallurgy, the company's independent research and development of the carbide In the metallurgical field, the company has independently developed special robot products for high-temperature operation in front of the furnace, which can replace manual operation to realize high-temperature and dangerous operation. At the same time, the company continues to promote various types of mineral heat furnace, alloy smelting various aspects of robot research and development, part of the product has entered the debugging stage;
② in the field of high-end medical care, the company has invested in a number of medical companies by investing in high-end medical robots, the projects involved in the development of minimally invasive laparoscopic surgery robots, image-guided radiotherapy precise positioning system research and development, remote-assisted minimally invasive implantation of vertebral arch root robots
At the same time, in order to meet the needs of downstream customers other post-processing, the company
① in the field of energy saving and environmental protection to acquire Austrian P& P company to obtain waste acid treatment technology, the relevant business is now achieving rapid growth;
② in the field of intelligent logistics, the launch of intelligent freight transport equipment supporting the intelligent information technology system can be realized in the logistics warehousing, inventory, out of the warehouse automation. The company's main market is dominated by the domestic market, and the company's main market is dominated by the domestic market. At present, the company's main market is dominated by the domestic market, its products are sold to all provinces and regions except Hong Kong, Macao and Taiwan, and exported to Europe, Asia, Africa and other regions of more than a dozen countries, downstream customers, including PetroChina, Sinopec, Huanqiu Engineering, Zhongtai Mining and Metallurgy, Junzheng Group, Yihaijiali and other industry giants.
The company's plant and production line facilities are well-equipped, laying the foundation for intelligent manufacturing "precision tools".
In terms of production, the company has built more than 40,000 square meters of manufacturing and assembly debugging workshops, with more than 100 sets of production and processing equipment and experimental testing equipment. As of the end of 2018, the annual output value of the core products and ancillary services of the company's intelligent complete sets of equipment reached 413 million yuan;
In terms of research and development, the company integrates the accumulation of industrial resources with the strong disciplinary advantages of HIT, and independently researches and develops a number of technologies and products to fill the gaps in the country, with independent intellectual property rights, and the main performance indicators of the products have already reached the leading level in the country and the advanced level in the international arena. According to the data on the website of Patent Gateway, as of 2019, the company has applied for 225 patents approved by the State Intellectual Property Office, of which 99 are utility models, 76 are invention disclosures, 47 are invention authorizations, and 3 are designs. At the same time, the company has a considerable number of core technologies in the form of proprietary technology by confidentiality measures, solid technical barriers.
The company has technical authority in the industry, and has been responsible for and participated in the formulation of a number of industry and national standards, including the industry standard JB/T General Technical Conditions for Palletizers, and the national standard Safety Requirements for Palletizers/ General Technical Conditions for Palletizing Robots. The company has won many awards and its leading position is recognized by the government and the market. The company is a nationally recognized industrialization base for the achievements of the High Technology Research and Development Program (863 Program), and it undertakes the technology research and development and industrialization of many major projects at the national, provincial and ministerial levels, and the company's technology center was recognized as a "National Enterprise Technology Center" in 2018. The company is a member of China Robotics TOP10 Summit, Chapec's "Top 10 System Integrators in General Industry", China Robotics Summit's "Top 100 Robotics System Integrators", and "China's Top 100 Artificial Intelligence Enterprises", China's Top 100 Intelligent Manufacturing Enterprises in 2017, and listed in the "Forbes China Top 100 Listed Potential Enterprises". In addition, the Company has received special funding support from the Ministry of Science and Technology and other governmental organizations, and has launched a number of system R&D and demonstration projects in the fields of industrial and medical robots. In addition, the minimally invasive laparoscopic surgical robot developed by Serenity Medical (Inc.), in which the Company holds a 16.54% stake, has successfully completed the world's first 5G remote surgery.
Benefiting from the stabilization of downstream customers in the petrochemical industry and the extension of business areas, the company's performance and profitability stabilized after 2015 and entered the upward fast track. 2011-2019, the company's revenue and net profit CAGR were 11.86% and 9.45%, respectively. The company based on the original business technology, customer resource advantages, the development of product support services, robotics, environmental protection and emission reduction and other strategic new business, to open up new markets in metallurgy, food, logistics and other fields, business upgrading results gradually appeared after 2015, operating income, net profit of the mother of the significant growth in revenue, net profit of the mother of the company from 2015-2019 is expected to achieve a growth rate of 19.43%, 15.06% CAGR growth rate, respectively. 19.43%, 15.06%. According to the 2019 performance report, it is expected to realize revenue of 1.46 billion yuan, an increase of 59.43% year-on-year; net profit of 310 million yuan, an increase of 70.18% year-on-year, and the growth potential of new business has appeared.
4) Anchor Testing: Motor Vehicle Integration Inspection Leader
Shenzhen Anchor Testing Company Limited was founded in Shenzhen in 2006, and is now listed on the Shenzhen Stock Exchange's Growth Enterprise Board in 2016 (Anchor Testing, 300572.SZ). The company is a major provider of total solutions in the field of domestic motor vehicle testing, and is a leader in the field of integrated motor vehicle testing.
Integrated supplier in the field of motor vehicle testing, product line to achieve full coverage, the industry chain from the upstream equipment to the downstream operation extension. The company focuses on the motor vehicle testing field and continuous innovation, the product line comprehensive coverage of motor vehicle testing system, testing industry network monitoring system, motor vehicle exhaust remote sensing detection system, intelligent driver testing and training system, for the motor vehicle field vehicle manufacturing, maintenance, inspection, research, supervision, driving training and other types of organizations to provide customers with a comprehensive solution covering the design of the product and system programs, installation and integration, operation and maintenance and industry supervision. It can provide comprehensive solutions covering product and system program design, installation and integration, operation and maintenance, and industry supervision. Among them, motor vehicle testing system solution is the company's core pillar business, revenue of 489 million yuan in 2018, revenue accounted for 92.7%, market share of 12.83%; the business segment in the new car off the line testing equipment is a high-end product, the future is expected to break through the monopoly of foreign giants, to achieve domestic substitution; other networking supervision system, motor vehicle exhaust remote sensing detection system and other businesses benefit from policy support and industry barriers are high, also benefit from policy support and industry barriers.
The Company actively promotes the extension of its business to the downstream of the industrial chain to improve its business structure and complete the industrial closed loop. Since 2018, the company has cut into the downstream automobile testing station business through a series of acquisitions, and has invested in XingChe Security Inspection (70%), China Inspection Group (75%), Shenzhen AnChe Shenghui (20%), to rapidly acquire testing stations and develop the motor vehicle market, and the company's momentum has basically formed from the upstream equipment to the downstream operation extension. High-quality veteran testing stations have obvious advantages in terms of customer source and customer flow, coupled with the relatively fixed cost of testing stations, the gross profit rate of the testing station business acquired by the company in 2018 amounted to 56.17%, which is higher than the gross profit rate of the original core business of vehicle testing system by 7.5 pct. On January 8, 2020, the company proposed to acquire 70% of the equity interests of five Shandong Zhengzhong companies at a one-time purchase price of 344 million yuan, to further enter the used car trading services, motor vehicle insurance services and the market for motor vehicles. Used car trading services, motor vehicle insurance agency business, formally completing the industry chain closed loop. The company's sales channels are complete in terms of distribution, and as of 2018, they have covered many regions in China, including East China, Central China, Southwest China, Northeast China, North China, South China, and Northwest China.
The company has established high barriers in terms of R&D capability, production technology, and industrial layout.
The company is a national high-tech enterprise, emphasis on innovation, R & D expenses accounted for a stable proportion of total revenue between 5% -7%, in addition, the company through the establishment of a shareholding platform company so that the company's technical staff indirectly hold the company's shares, the formation of employees and the company *** with the development of long-term incentive mechanism, has now formed a more mature R & P; D process and efficient R & D team, per capita output continues to improve, and the company has been able to develop its own R & P team. R&D team, per capita output continues to improve, engineer dividend fully released, independent research and development of intelligent driving instructor robot training system technology, motor vehicle exhaust remote sensing detection system and many other core technology level leading the country, as of December 31, 2018, the company owns 61 patents and 54 computer software copyright, and owns a number of non-patent technology. In terms of industrial layout, the Company is one of the few enterprises in China that can provide comprehensive solutions for motor vehicle testing system, intelligent driver testing and training system, remote sensing monitoring solution for motor vehicle exhaust and motor vehicle industry network supervision system, and it is also the only listed company in China that has laid out the whole industrial chain of motor vehicle testing. The company has been honored as one of the "Top 30 Auto Insurance Companies in China", "Most Growing Enterprise in China Auto Insurance", and "Outstanding Enterprise of Scientific and Technological Innovation in China Auto Insurance". By virtue of its own competitive barriers, the company maintains a leading position in both revenue growth and volume compared to its peers.
Multi-year high performance growth, profitability steadily improved. 2011 to 2018, the company's revenue rose from 156 million yuan to 528 million yuan, CAGR of 18.97%, or 3.37 times; parent net profit rose from 22 million yuan to 189 million yuan, CAGR of 28.34%, or 5.73 times; the company's 2018 net profit rose from 22 million yuan to 189 million yuan, or 28.34%, or 5.73 times; the company's 2018 net profit rose from 22 million yuan to 129 million yuan, or 5.73 times. 5.73 times; the company's revenue growth rate before 2018 has been higher than the same industry motor vehicle testing system revenue growth rate, volume is also ahead of the same industry companies and to the growth rate of more than 25% per year, 2017-2018 reached higher than the industry nearly three times, means that the company to follow the development of the industry and deepen the market share.
The company's gross profit margin is higher than the industry average and stably stays above 45%, 49.04% in 2018, an increase of 2.16pct compared with 2011; the net profit margin is more than 20% and steadily increasing after 2017, 23.69% in 2018, an increase of 9.68pct compared with 2011. The gross profit margin of the company is expected to be further improved with the product upgrading driven by the improvement of its own R&D capability, while the increase in net profit may represent that there is still room for development in the vehicle testing industry where the company is located. According to the company's 2019 annual performance report, total revenue of 973 million yuan was realized in 2019, an increase of 84.30% year-on-year, mainly from the sales of motor vehicle testing system and testing industry network supervision system. Net profit of 189 million yuan, an increase of 50.51%.
5) Jincheng Medicine: Cephalosporin intermediates & Glutathione leading supplier
Shandong Jincheng Medicine Group Co. The company is the largest cephalosporin manufacturer in China. The company is the largest manufacturer of cephalosporin intermediates in China, and the only manufacturer of glutathione APIs in China.
Starting from pharmaceutical intermediates, the company has gradually extended its business to the downstream by acquiring qualifications and cooperation. The company's intermediates include cephalosporin powder injection preparation, cephalosporin side chain intermediates, etc., which are widely used in the downstream mainstream antibiotic preparations, and its customers include overseas pharmaceutical giants such as Cavalente, Alabindo, and ACS DOBFAR, etc., as well as domestic famous cephalosporin manufacturers such as Qiluanti, Guangxi Kelun, and Jiaozuo Lizhu. Since 2014, the company has acquired Shanghai Tianchen Pharmaceuticals (now Shanghai Jincheng Pharmaceuticals), Zhongshan Daobufa (cash city Jinsu) and other terminal preparation manufacturers, to obtain the approval qualification to enter the field of downstream cephalosporin preparations.
In 2016, with the customer ACS DOBFAR SPA reached a cooperation, build antibiotics intermediates export - API import - preparation production and sales of the industry chain closed loop. 2017, the company through the acquisition of Longyi Pharmaceuticals (cash Chengtaier) to realize the business extension to the field of women and pediatrics terminal preparation; The company also through the acquisition of special API scarce qualification, The company also through the acquisition of special API scarce qualification.
The company's specialty APIs are glutathione and adenosylmethionine. Among them, glutathione is the main product, and the technology was acquired by the company in 2009 by signing the Technology License Contract from Japan's Chung Hwa Co. In 2012, the company obtained the approval from China's Drug Administration. At present, the company has grown into a leading company in the field of glutathione APIs, and is actively exploring the application of its products in downstream health care products, feed and bio-fertilizers, etc. Meanwhile, the company has laid out the field of innovative medicines in a forward-looking manner by way of cooperation, and reached a cooperation with Dongfangliu in 2018, and obtained the privilege of industrialization in domestic market of the U.S. cervical cancer virus therapeutic vaccine and the Toca511& TocaFC gene therapy project for the treatment of malignant tumors. The relevant products have a broad application prospect. While opening up the domestic market, the company is also continuing to strengthen the development of new overseas customers, products are exported to Japan, Germany, Italy, South Korea, India and other countries and regions.
Rare approvals + technical resources + continuous expansion of production capacity, building the company's moat.
In terms of qualifications, the company has acquired production approvals for mainstream cephalosporin preparations, gynecological and immunological products through the acquisition of end-user preparation manufacturers, and its nearly 20 subsidiaries have passed the national GMP certification for each preparation manufacturer;
In terms of production, the company has continued to increase its production capacity, and the annual production capacity of the company's pharmaceutical intermediates, biopharmaceuticals, specialty APIs, and pharmaceutical chemicals reached 4478 million tons in 2018, which is a record high. As of 2018, the annual output of pharmaceutical intermediates, biopharmaceuticals, specialty APIs and pharmaceutical chemicals reached 4478.98, 219.65 and 8787.61 tons respectively;
In terms of technology, the company has national and Shandong provincial-level technology centers, and has set up research and development teams focusing on cephalosporin pharmaceutical intermediates, biopharmaceuticals, and end-user preparations, and has entered into long-term cooperation with a number of universities and scientific research institutes, including Tsinghua University. As of mid-2019, the company*** has 125 authorized patents, including 112 invention patents, 12 utility models and 1 design.
The value of the company is recognized by the state and the industry. The company is a national high-tech enterprise, the National Torch Plan enterprise, Shandong Province Science and Technology Tackling Plan implementation unit, the company's "third-generation cephalosporin intermediate active ester key technology and industrialization project" in 2012 won the second prize of the National Science and Technology Progress. The company is listed as one of the "Top 100 Pharmaceutical Companies in China", "Top 50 Pharmaceutical Companies in China", "Top 100 Chemical Companies in China", "Most Innovative Listed Companies", etc. The subsidiaries of the company are listed as "Top 100 Pharmaceutical Companies in China", "Top 50 Pharmaceutical Companies in China" and "Most Innovative Listed Companies in China". The company's subsidiary, Jincheng Kerui, has been recognized by the Ministry of Industry and Information Technology of the People's Republic of China as one of the "third batch of manufacturing single champion enterprises".
The company's traditional business of pharmaceutical intermediates has been growing steadily for a long time, and the downstream terminal preparation business has been growing rapidly. 2010-2018, the company's revenue CAGR reached 18.78%, and the net profit CAGR reached 12.26%. After 2014, the company focused on downstream extension, so that the terminal preparation business has grown rapidly into a new pillar of the company's business, and then pushed the significant growth of performance. The profitability of the company is on an upward trend as a whole, benefiting from the continuous improvement of the proportion of high-margin products, the gross profit margin of the company was 50.07% in 2018, 21.25 pct higher than that in 2010; the net profit margin has remained above and below 10% all year round. According to the performance report of 2019, the main business of the company was in good condition during the year, the market of pharmaceutical and chemical segment remained stable, and the sales of biological specialty APIs, cephalosporin preparations and other products also realized stable growth compared with the same period last year. Excluding the temporary impact of goodwill impairment of 122 million and 290 million yuan of subsidiary Jinchengtel in 2018 and 2019, the company's net profit for 2019 is expected to be 421 million yuan, an increase of 9.12% year-on-year.
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