Zhejiang Tianyu Pharmaceutical (300702) 天风证券·2024-12-13 06:55Investment Rating - The report initiates coverage with a "Buy" rating for Tianyu Co., Ltd. with a target price of 22.83 CNY, representing a potential upside from the current price of 18.33 CNY [6][107]. Core Insights - Tianyu Co., Ltd. is a leading global manufacturer of cardiovascular APIs and a key supplier of intermediates for Merck's oral COVID-19 drug, Molnupiravir. The company is also one of the largest suppliers of Valsartan globally [1][16]. - The report highlights the company's strong growth potential in non-sartan APIs, with 39 products already commercialized and 13 in development, which could serve as a second growth curve for the company [2][65]. - The CDMO business is expected to maintain stable growth due to established long-term partnerships with major formulation manufacturers and a robust project pipeline [3][88]. - The integration of API and formulation businesses is becoming increasingly evident, with a significant increase in approved formulation products, which is expected to drive high growth in the coming years [4][91]. Summary by Sections 1. Company Overview - Tianyu Co., Ltd. was established in 2003 and specializes in the research, manufacturing, and sales of APIs and advanced pharmaceutical intermediates. The company has a strong focus on cardiovascular drugs and has achieved various international certifications [1][16]. 2. API and Intermediates - The demand for sartan APIs is steadily increasing, while competition remains fierce. The price of Valsartan has stabilized between 600-700 CNY per kilogram. The company is expanding its non-sartan product offerings, which are expected to contribute significantly to revenue growth [2][37]. 3. CDMO Business - The company has built stable relationships with several large formulation manufacturers. Following the successful completion of an urgent project for Merck in 2021, Tianyu has accelerated the expansion of its R&D and business teams, positioning itself for continued growth in the CDMO sector [3][88]. 4. Formulation Business - The company has accumulated a rich reserve of approved formulation products, with 46 approved formulations across 30 varieties as of the first half of 2024. This segment is expected to experience rapid growth due to the integration of API and formulation strategies [4][93]. 5. Financial Forecast and Valuation - The report forecasts total revenues for 2024-2026 to be 27.08 billion CNY, 32.40 billion CNY, and 39.48 billion CNY, respectively, with corresponding net profits of 0.83 billion CNY, 2.54 billion CNY, and 3.51 billion CNY. The valuation is based on a PB multiple of 2.1x for 2025 [5][106][107].