Hepalink(SZ:002399) Xinda Securities·2024-08-09 08:30Investment Rating - The investment rating for Hepalink (002399) is "Buy" [1]. Core Views - Hepalink is a leading integrated manufacturer of heparin raw materials and formulations, with expectations for performance stabilization and recovery in 2024 due to upstream raw material cost declines and the end of inventory destocking by downstream customers [1][6]. - The company's revenue has grown from 2.292 billion in 2015 to 5.446 billion in 2023, with a significant drop in 2023 due to price declines and inventory adjustments [1][10]. - The heparin raw material business is expected to stabilize in 2024, with a recovery in sales volume and gross margin as inventory destocking concludes [1][17]. - The heparin formulation business has shown strong performance in Europe and the US, with domestic procurement policies driving volume growth [1][12]. - The CDMO (Contract Development and Manufacturing Organization) business is projected to achieve rapid growth exceeding 10% from 2024 to 2026 [1][12]. Summary by Sections Company Overview - Hepalink, established in 1998, specializes in heparin sodium formulations, heparin raw materials, and large molecule CDMO services [6][12]. - The company has a strong market position in the heparin industry, with a comprehensive supply chain and cost management advantages [1][12]. Financial Performance - Total revenue decreased from 7.159 billion in 2022 to 5.446 billion in 2023, with a projected recovery to 6.104 billion in 2024 [2][10]. - The net profit attributable to the parent company was -783 million in 2023, with expectations of a return to profitability in 2024 with a net profit of 930 million [2][10]. - Gross margin for heparin raw materials fell to 20.7% in 2023, while the gross margin for heparin formulations improved to 43.58% [2][12]. Business Segments - Heparin business accounts for nearly 80% of total revenue, with the CDMO business contributing around 20% [12][17]. - The heparin raw material revenue was 13.08 billion in 2023, down 51% year-on-year, while heparin formulation revenue was 29.79 billion, showing resilience [1][18]. - The CDMO business faced challenges in 2023 but is expected to recover and grow rapidly in the coming years [1][12]. Market Dynamics - The heparin raw material prices have fluctuated significantly, with a decline from 8,000-12,000 USD/kg in 2023 to 4,000-6,000 USD/kg, but are expected to stabilize in 2024 [1][21]. - The company has a strong export market, with heparin raw materials primarily supplied to international pharmaceutical companies [17][21].