赛升药业(300485) - 2018 Q4 - 年度财报

Important Notice, Table of Contents and Definitions Risk Factors The company faces key risks from pharmaceutical policy shifts, market competition, product quality, R&D failures, and core talent loss, potentially impacting its performance - The company faces five core risks - Pharmaceutical Industry Policy Risk: Policies such as centralized drug procurement, medical insurance policies, 'two-invoice system', and volume-based procurement increase compliance and operational risks for the company[6] - Market Expansion and Price Decline Risk: Drug tendering, medical insurance payment reforms, and intensified market competition may lead to a decrease in the company's product prices, affecting profitability[7] - Product Quality Risk: The company's main products are injections with complex production processes, where issues at any stage could lead to quality risks[8] - New Drug R&D Risk: New drug development involves long cycles and multiple stages, with risks of development failure or market rejection, potentially impacting the company's growth[10] - Core Personnel Turnover Risk: As a high-tech enterprise, the loss of core technical and management personnel could adversely affect the company's R&D and stable development[11] Profit Distribution Plan The company's board of directors approved the 2018 profit distribution plan, proposing a cash dividend of 1.20 Yuan (tax inclusive) per 10 shares to all shareholders, with no bonus shares or capital reserve conversions 2018 Annual Profit Distribution Plan | Distribution Method | Per 10 Shares Distribution Plan | | :--- | :--- | | Cash Dividend | 1.20 Yuan (tax inclusive) per 10 shares | | Bonus Shares | 0 shares | | Capital Reserve Conversion | 0 shares | Company Profile and Key Financial Indicators Key Accounting Data and Financial Indicators In 2018, the company's operating revenue significantly grew by 90.37% to 1.428 billion Yuan, while net profit attributable to shareholders slightly increased by 0.53% to 283 million Yuan, with basic earnings per share remaining flat, and net cash flow from operating activities increasing by 35.40% Key Financial Indicators for 2018 | Indicator | 2018 | 2017 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 1,427,750,943.80 | 749,986,848.13 | 90.37% | | Net Profit Attributable to Shareholders (Yuan) | 283,107,048.21 | 281,604,133.53 | 0.53% | | Net Cash Flow from Operating Activities (Yuan) | 146,516,272.45 | 108,212,673.95 | 35.40% | | Basic Earnings Per Share (Yuan/share) | 0.590 | 0.590 | 0.00% | | Weighted Average Return on Net Assets | 11.66% | 12.79% | -1.13% | | Total Assets (Yuan) | 2,760,559,359.20 | 2,453,403,315.15 | 12.52% | 2018 Quarterly Key Financial Indicators (Unit: Yuan) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 270,473,451.39 | 302,671,052.82 | 366,543,603.57 | 488,062,836.02 | | Net Profit Attributable to Shareholders | 59,865,789.84 | 71,938,904.25 | 78,361,425.99 | 72,940,928.13 | - The company's 2018 non-recurring gains and losses totaled 20.79 million Yuan, primarily from gains and losses on entrusted investments or asset management, amounting to 23.23 million Yuan[30] Company Business Overview Main Business and Core Competencies The company's main business involves R&D, production, and sales of injectable preparations, focusing on cardiovascular, immune, and nervous system diseases, with revenue growth driven by the 'two-invoice system' and optimized customer structure, maintaining market leadership through balanced product portfolio, strong R&D, unique processes, and integrated supply chain - The company's main business is injectable preparations, with leading biochemical products covering cardiovascular, immune (anti-tumor), and nervous system therapeutic areas[32] - Performance growth was primarily driven by the implementation of the 'two-invoice system' policy, shifting the customer structure from small and medium distributors to large distribution partners, leading to significantly accelerated operating revenue growth[35] - The company holds a market leadership position with over 50% market share in several product categories, including cardiovascular and immunomodulators[37] - Core competencies include - Product Portfolio Stability: Five leading products are developing in a balanced manner with high market shares, mitigating single-product dependency risk[39] - R&D and Patents: Possessing 42 national patent technologies, including 31 invention patents, with high proficiency in biomacromolecule purification technology[40][41] - Integrated Supply Chain: Possessing a complete industrial chain from raw materials to multi-dosage form preparations, effectively diversifying risks[45] Management Discussion and Analysis Overview In 2018, the company advanced its operational management, strategic layout, and R&D innovation, completing the acquisition of Junyuan Pharmaceutical, participating in a pharmaceutical industry investment fund, achieving phased results in key R&D projects like 'Angiogenesis Inhibitor Peptide for Injection' and 'Nafamostat Mesylate for Injection', implementing equity incentives for core personnel, and steadily progressing with fundraising projects - The company's five main products maintained market competitive advantages, with Deoxyribonucleotide Sodium Injection having the highest revenue share at 35.76% and the highest gross margin at 91.34%[50] - In R&D, 'Nafamostat Mesylate for Injection' entered Phase III clinical trials, and 'Angiogenesis Inhibitor Peptide for Injection' entered Phase I clinical trials[54] - Strategic initiatives included acquiring 100% equity of Junyuan Pharmaceutical to extend the industrial chain, and investing 100 million Yuan to establish Suzhou Danqing Phase II Innovative Pharmaceutical Industry Investment Partnership, leveraging a 'industry + capital' platform advantage[58][59] - Construction of fundraising projects progressed steadily, but projects like the 'New Pharmaceutical Production Base' had their estimated completion time adjusted to end of 2019 due to external factors[57] Main Business Analysis During the reporting period, the company's operating revenue grew by 90.37%, primarily from pharmaceutical manufacturing, with immune system drugs seeing the fastest growth at 121.40%, and Central and Southern China regions experiencing explosive revenue growth of 202.92% and 407.15% respectively, while overall gross margin increased from 76.95% to 86.46%, sales expenses surged by 274.82% due to increased market promotion, and R&D investment rose by 96.38% Operating Revenue Composition (by Product) | Product Category | 2018 Revenue (Yuan) | Revenue Share | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Immune System Drugs | 769,371,111.40 | 53.89% | 121.40% | | Nervous System Drugs | 207,689,792.42 | 14.55% | 65.39% | | Cardiovascular and Cerebrovascular Drugs | 439,946,037.30 | 30.81% | 63.75% | Gross Margin by Product | Product Category | Operating Revenue (Yuan) | Operating Cost (Yuan) | Gross Margin | Gross Margin Change from Previous Year | | :--- | :--- | :--- | :--- | :--- | | Immune System Drugs | 769,371,111.40 | 88,917,804.96 | 88.44% | 11.79% | | Nervous System Drugs | 207,689,792.42 | 39,685,832.48 | 80.89% | 10.26% | | Cardiovascular and Cerebrovascular Drugs | 439,946,037.30 | 63,250,090.60 | 85.62% | 5.34% | Period Expense Changes | Expense Item | 2018 (Yuan) | 2017 (Yuan) | Year-on-Year Change | Main Change Explanation | | :--- | :--- | :--- | :--- | :--- | | Sales Expenses | 828,431,196.33 | 221,019,934.30 | 274.82% | Increase in marketing conference fees, academic promotion fees, etc | | Administrative Expenses | 58,946,022.99 | 41,715,830.38 | 41.30% | Increase in equity incentive expenses and intangible asset amortization | | R&D Expenses | 31,927,796.80 | 16,258,343.92 | 96.38% | Increased R&D investment in pipeline products | - Net cash flow from operating activities was 147 million Yuan, a 35.40% year-on-year increase, primarily due to higher sales revenue, while net cash flow from investing activities was -1.025 billion Yuan, a significant 364.50% year-on-year decrease, mainly due to reduced short-term bank wealth management investments[87][88] Assets and Liabilities Status As of year-end 2018, the company's total assets reached 2.761 billion Yuan, a 12.52% increase from the beginning of the year, with a significant shift in asset structure as monetary funds decreased from 60.11% to 20.76% of total assets due to investments in short-term wealth management products, while accounts receivable increased from 3.26% to 8.84%, and construction in progress rose from 10.23% to 14.49% Significant Changes in Asset Composition | Asset Item | Year-end 2018 Amount (Yuan) | Percentage of Total Assets | Year-end 2017 Amount (Yuan) | Percentage of Total Assets | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 573,089,214.77 | 20.76% | 1,474,817,657.53 | 60.11% | Due to short-term bank wealth management investments not matured at period-end | | Accounts Receivable | 243,999,879.73 | 8.84% | 80,062,742.49 | 3.26% | Due to sales growth | | Construction in Progress | 399,957,617.82 | 14.49% | 250,964,292.65 | 10.23% | Continued investment in fundraising projects | Investment Status Analysis During the reporting period, the company's total external equity investment was 83.286 million Yuan, a 278.57% year-on-year increase, including the acquisition of 100% equity in Shenyang Junyuan Pharmaceutical for 53.286 million Yuan and a 30 million Yuan investment in Suzhou Danqing Phase II Innovative Pharmaceutical Industry Investment Partnership, with 545 million Yuan of raised funds cumulatively invested and 631 million Yuan remaining unused for ongoing production base and industrialization projects 2018 Significant Equity Investments | Investee Company | Investment Method | Investment Amount (Yuan) | Shareholding Ratio | | :--- | :--- | :--- | :--- | | Shenyang Junyuan Pharmaceutical Co., Ltd | Acquisition | 53,286,000.00 | 100.00% | | Suzhou Danqing Phase II Innovative Pharmaceutical Industry Investment Partnership | New Establishment | 30,000,000.00 | 4.46% | - As of the end of the reporting period, the company had cumulatively invested 544.59 million Yuan of raised funds, with an unused balance of 630.65 million Yuan, primarily held in special accounts and used for time deposits and wealth management products[99] - The progress of some fundraising projects fell short of expectations, with the 'New Pharmaceutical Production Base Project' and 'New Cardiovascular and Immunomodulatory Product Industrialization Project' having their estimated completion dates extended to December 31, 2019, due to external factors[102] Analysis of Major Holding and Participating Companies During the reporting period, Shenyang Junyuan was added to the company's consolidated scope, while key subsidiary Sai'er Bio achieved 10.744 million Yuan in operating revenue and 1.178 million Yuan in net profit, and the newly acquired Shenyang Junyuan, still in integration, reported no operating revenue and a net loss of 0.557 million Yuan Operating Performance of Major Subsidiaries | Company Name | Type | Operating Revenue (Yuan) | Net Profit (Yuan) | | :--- | :--- | :--- | :--- | | Sai'er Bio | Subsidiary | 10,744,002.68 | 1,177,645.69 | | Shenyang Junyuan | Subsidiary | 0.00 | -557,009.45 | Outlook on Company's Future Development Facing a slowing and stricter pharmaceutical industry, the company aims to become a 'big health enterprise group' by strategically developing high-end, oral, and traditional Chinese medicine preparations, enriching its product line, expanding scale, and enhancing core competitiveness through R&D, collaborations, and M&A, with 2019 plans focusing on fundraising project completion, refined marketing, R&D team building, and active acquisition pursuits - Industry Trend: The pharmaceutical industry is entering a new cycle of low growth, strict regulation, and high entry barriers, highlighting the value of products and R&D[109] - Company Development Strategy: Establish four major platforms—R&D innovation, pharmaceutical industrial chain, collaboration, and industrial finance—to advance towards a 'big health enterprise group' while pursuing external expansion[117] - 2019 Operating Plan - Production: Promote the completion of fundraising projects and advance GMP certification for subsidiaries[118] - Marketing: Strengthen regional management, optimize resource allocation, and intensify academic promotion efforts[119][121] - R&D: Strengthen re-evaluation of core products, promote new product development, and enhance external collaborations[122] - Talent: Recruit personnel for the new production base and improve the talent management system[123] - M&A: Actively utilize M&A funds to seek acquisition opportunities with peer or upstream/downstream enterprises[123] Significant Matters Profit Distribution and Equity Incentives In 2018, the company implemented its 2017 profit distribution plan and proposed the 2018 plan, with cash dividends exceeding 20% of net profit for the past three years, and launched a 2018 restricted stock incentive plan, granting 4.166 million restricted shares to 88 core employees to incentivize and retain key talent Cash Dividend Situation Over the Past Three Years | Dividend Year | Cash Dividend Amount (Yuan) | Ratio of Net Profit Attributable to Ordinary Shareholders of the Listed Company in Consolidated Financial Statements | | :--- | :--- | :--- | | 2018 | 58,099,920.00 | 20.52% | | 2017 | 57,600,000.00 | 20.45% | | 2016 | 60,000,000.00 | 23.22% | - The company implemented the 2018 Restricted Stock Incentive Plan, granting 4.166 million restricted shares (out of 4.1982 million initially planned) to 88 (out of 91 initially planned) incentive recipients on August 21, 2018[152][153] Significant Contracts and Transactions During the reporting period, the company had no significant entrustment, contracting, leasing, guarantee, or related party transactions, actively engaging in entrusted wealth management with idle raised and own funds totaling 1.115 billion Yuan, primarily in bank wealth management products, while completing the acquisition of Shenyang Dongang Pharmaceutical Co., Ltd., renamed Shenyang Junyuan Pharmaceutical Co., Ltd., and its subsidiary Sai'er Bio established a Tianjin branch and obtained an expanded drug production license Overview of Entrusted Wealth Management During the Reporting Period | Specific Type | Fund Source | Amount Incurred (10,000 Yuan) | Unmatured Balance (10,000 Yuan) | | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | Raised Funds | 51,500 | 51,500 | | Bank Wealth Management Products | Own Funds | 60,000 | 27,000 | | Total | | 111,500 | 78,500 | - Significant Subsidiary Matters - Shenyang Junyuan: Completed the bidding, acquisition, and business registration change for 100% equity of Shenyang Dongang Pharmaceutical, renaming it 'Shenyang Junyuan Pharmaceutical Co., Ltd'[177][178] - Sai'er Bio: Established a branch in Tianjin and obtained an expanded 'Drug Production License' from the Beijing Municipal Drug Administration[179] Share Changes and Shareholder Information Share Change Status During the reporting period, the company's total share capital increased from 240 million to 484 million shares, primarily due to the lifting of lock-up on pre-IPO shares, a 10-for-10 capital reserve to share transfer, and the issuance of 4.166 million restricted shares under an equity incentive plan, reducing restricted shares from 64.80% to 49.04% of total shares Summary of Share Changes | Share Class | Quantity Before Change | Quantity After Change | Reason for Change | | :--- | :--- | :--- | :--- | | Restricted Shares | 155,520,000 | 237,446,000 | Equity incentive issuance, capital reserve conversion, executive lock-up | | Unrestricted Shares | 84,480,000 | 246,720,000 | Restricted share release, capital reserve conversion | | Total Share Capital | 240,000,000 | 484,166,000 | Capital reserve conversion and equity incentive issuance | - Main reasons for share changes include - In June 2018, 155.52 million pre-IPO shares became tradable[182] - In June 2018, the capital reserve to share transfer plan of '10 shares for every 10 shares' was implemented, increasing total share capital to 480 million shares[183] - In September 2018, the initial grant of the restricted stock incentive plan was completed, adding 4.166 million shares[183] Shareholder Information As of year-end 2018, the company had 20,599 shareholders, with controlling shareholder and de facto controller Mr. Ma Biao holding 49.25% of shares, and Mr. Ma Biao, Ms. Ma Li (11.78%), and Ms. Liu Shuqin (3.21%) acting in concert (mother-son, sibling relationship), collectively holding over 64% of shares - As of the end of the reporting period, the company had 20,599 common shareholders[193] Top Three Shareholders' Shareholding | Shareholder Name | Shareholder Nature | Shareholding Ratio | Shares Held at Period-End | | :--- | :--- | :--- | :--- | | Ma Biao | Domestic Natural Person | 49.25% | 238,464,000 | | Ma Li | Domestic Natural Person | 11.78% | 57,024,000 | | Liu Shuqin | Domestic Natural Person | 3.21% | 15,552,000 | - The company's controlling shareholder and de facto controller is Mr. Ma Biao, who is a sibling to Ms. Ma Li, and Ms. Liu Shuqin is their mother[194][196] Preferred Shares Related Information Overview of Preferred Shares The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[201] Directors, Supervisors, Senior Management, and Employees Changes in Directors, Supervisors, Senior Management and Their Shareholdings During the reporting period, some directors, supervisors, and senior management personnel changed due to term expiration, while their shareholdings increased due to capital reserve to share transfer and equity incentive plans, with Chairman Ma Biao's holdings reaching 238 million shares at period-end, and executive compensation determined by the Remuneration and Assessment Committee based on performance - On February 1, 2018, several company directors, independent directors, supervisors, and the chief engineer resigned due to term expiration[206] - Some directors and senior executives increased their shareholdings through the 2018 Restricted Stock Incentive Plan, with Vice General Manager Wang Xuefeng and Marketing Director Zhang Fan each receiving 150,000 shares[222] Employee Information As of the end of the reporting period, the company had 512 employees, with production and technical personnel constituting the majority at 32.6% and 30.1% respectively, and approximately 67% of employees holding college degrees or higher, while the company has established a market-aligned and performance-based compensation policy and implemented employee training programs including internal and external training Employee Professional Composition | Professional Category | Number of People | Percentage | | :--- | :--- | :--- | | Production Personnel | 167 | 32.6% | | Sales Personnel | 73 | 14.3% | | Technical Personnel | 154 | 30.1% | | Financial Personnel | 25 | 4.9% | | Administrative Personnel | 93 | 18.1% | | Total | 512 | 100.0% | - The company's compensation policy ensures alignment with market levels, combining job analysis and performance appraisal to balance efficiency and fairness[225] Corporate Governance Overview of Corporate Governance The company operates strictly in accordance with laws and regulations like the 'Company Law' and 'Securities Law', with its corporate governance meeting regulatory requirements, maintaining independence from the controlling shareholder in business, personnel, assets, organization, and finance, holding 4 shareholder meetings, 8 board meetings, and 8 supervisory board meetings during the reporting period, and its specialized committees (Audit, Remuneration, Strategy, Nomination) actively fulfilled their duties by reviewing financial matters, executive compensation, major investments, and personnel nominations - The company's corporate governance structure is sound, with its actual status complying with normative documents on listed company governance issued by the China Securities Regulatory Commission[230][238] - The company is independent of its controlling shareholder in business, personnel, assets, organization, and finance, possessing autonomous operational capabilities[239][240] - The Board of Directors' four special committees (Audit, Remuneration and Assessment, Strategy, Nomination) held multiple meetings during the reporting period, fulfilling their respective duties by reviewing significant matters including annual financial reports, executive compensation, equity incentives, external investments, and director re-elections[245][246][248] - Based on the '2018 Internal Control Self-Assessment Report', the company believes its internal controls are effective, with no material weaknesses or significant deficiencies in financial or non-financial reporting[252][253] Corporate Bonds Related Information Overview of Corporate Bonds The company has no publicly issued and listed corporate bonds on stock exchanges that are either unmatured or have not been fully redeemed as of the approval date of the annual report - The company has no outstanding or unredeemed corporate bonds[256] Financial Report Audit Report Grant Thornton (Special General Partnership) issued a standard unqualified audit opinion on the company's 2018 financial statements, affirming that they fairly present the company's financial position and operating results in all material respects, with key audit matters being 'provision for impairment of accounts receivable' and 'goodwill impairment' due to significant management judgments involved - The audit opinion type is a standard unqualified opinion[258] - Key Audit Matter One: Provision for impairment of accounts receivable; as of year-end 2018, accounts receivable balance was 257 million Yuan, with a bad debt provision of 13.086 million Yuan, listed as a key audit matter due to its materiality and complex judgment involved in assessment[263] - Key Audit Matter Two: Goodwill impairment; as of year-end 2018, the book balance of goodwill was 21.8651 million Yuan, listed as a key audit matter due to its materiality and the significant management judgment required for impairment testing[267] Financial Statements Financial statements show the company's total assets increased from 2.453 billion Yuan to 2.761 billion Yuan, operating revenue significantly grew to 1.428 billion Yuan, but total profit slightly decreased from 331 million Yuan to 330 million Yuan due to sharp increases in sales and other costs, while operating cash flow remained positive at 147 million Yuan, and share capital expanded from 240 million to 484 million shares through capital reserve conversion and restricted stock issuance Consolidated Balance Sheet Summary (Unit: Yuan) | Item | Period-End Balance | Period-Beginning Balance | | :--- | :--- | :--- | | Total Assets | 2,760,559,359.20 | 2,453,403,315.15 | | Total Liabilities | 205,073,804.97 | 133,912,073.01 | | Total Equity Attributable to Parent Company Owners | 2,554,113,066.35 | 2,318,173,172.59 | Consolidated Income Statement Summary (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Total Operating Revenue | 1,427,750,943.80 | 749,986,848.13 | | Total Operating Cost | 1,141,768,392.65 | 465,921,176.21 | | Total Profit | 330,618,035.25 | 331,386,637.47 | | Net Profit | 283,161,466.54 | 281,531,374.73 | Consolidated Cash Flow Statement Summary (Unit: Yuan) | Item | Current Period Amount | Prior Period Amount | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 146,516,272.45 | 108,212,673.95 | | Net Cash Flow from Investing Activities | -1,024,806,875.21 | 387,457,785.82 | | Net Cash Flow from Financing Activities | -23,437,840.00 | -60,000,000.00 | | Net Increase in Cash and Cash Equivalents | -901,728,442.76 | 435,670,459.77 | Reference Documents Catalog Reference Documents Reference documents for this report include the original annual report signed by the legal representative, original signed and sealed financial statements and audit report, and originals of all publicly disclosed documents and announcements during the reporting period - Reference documents include - Original Annual Report - Original Financial Statements - Original Audit Report - All publicly disclosed documents during the reporting period[665][666]