The revenues of Huadong Pharmaceutical, Fosun Pharma and Hengrui Pharma are similar. Why is the market value difference so big?

Judging from the profit rate of total assets (%), profit rate of main business (%) and net profit rate of total assets (%), Hengrui Pharma is much better than Fosun Pharma and East China Medicine!

In addition, Hengrui Pharma mainly earns income from anti-tumor, anesthesia, radiological imaging and other aspects.

Among them, anti-tumor drugs: gastric cancer, breast cancer, pancreatic cancer and lung cancer.

The top five cancers in China: lung cancer, breast cancer, gastric cancer, colon cancer and liver cancer.

Wait a minute.

It can be said to be the core of world medicine!

And it can be seen from the comparison of research and development.

Hengrui Pharma's investment in R&D is much higher than that of other pharmaceutical companies.

The market will be even bigger.

More importantly!

As far as status is concerned, Hengrui Pharma has produced many firsts in the pharmaceutical history of China:

The first China pharmaceutical company to sell injections to the United States and the European Union;

The first enterprise to transfer innovative biopharmaceuticals abroad;

The domestic market share of antineoplastic drugs and surgical drugs ranks first.

Finally, from the technical indicators of ROE:

Hengrui Pharma keeps the ROE index above 20% all the year round;

The annualized ROE of Fosun Pharma is only12%;

Therefore, overall, the gap is not small, and people have stepped out of the main wave and received financial support. However, the trend of East China Medicine and Fosun Pharma is much weaker, and the main rising wave trend is not strong!

The market value of a company is determined by two factors.

According to the formula of market value = net profit * valuation, the market value of an enterprise is only related to net profit and valuation.

Let's look at the net profit between the three. Hengrui's 20 19 revenue was 23.289 billion and its net profit was 5.328 billion.

Fosun Pharma's revenue in 20 19 was 28.5 billion and its net profit was 3.3 billion.

From 2065438 to 2009, the revenue of Huadong Pharmaceutical was 35.4 billion and the net profit was 2.8 billion.

In the case of similar revenue scale, Hengrui's net profit is the most, almost the sum of the net profit of East China and Fuxing.

In the first factor affecting the market value, net profit, East China and Fuxing have suffered a crushing defeat.

Look at the second factor that affects the market value-the price-earnings ratio reflects the market sentiment. Under normal circumstances, the market will give high valuation to companies with development potential, large growth space and high R&D investment. Let's take a look at the scale of R&D investment and the income ratio of the three companies in the past five years.

From the chart, we can easily see that Hengrui almost crushed the expenditure of East China and Fuxing in R&D..

Only by investing in R&D on a large scale can we ensure the competitiveness of enterprises, and it is also the driving force for their future development.

Only in this way can the market give a high valuation.

By the third quarter of 2020, Hengrui's static P/E ratio will be 90 times, East China 16 times and Fuxing 45 times.

Finally, the factors that affect the market value of enterprises are only related to net profit and valuation, not just the scale of revenue.

Actually, you can't look at the revenue. The market value of a stock depends on profit and valuation. From the perspective of profitability, it is the market's expectation of future earnings of stocks. Both profit and income are lagging indicators. What the stock market trades is actually the market's expectation of future earnings. Finally, valuation is influenced by many factors such as overall market liquidity and market risk preference.

First of all, from the perspective of ROE, ROE of Hengrui Pharma is 16%, ROE of Fosun Pharma is 7.52%, and ROE of East China Medicine is 17.6 1%. Look at the debt ratio. The debt ratio of Huadong Medicine is 39%, that of Fuxing Medicine is 50%, and that of Hengrui Pharma is only 12%. To put it simply, Hengrui Pharma's high ROE is operated by itself, while the ROE of Huadong Medicine and Fuxing Medicine is largely due to leverage.

From the valuation point of view, even if the market gives Fosun Pharma, Hengrui Pharma and Huadong Pharma the same valuation (which is certainly impossible). Then market value = profit * valuation. Let's take a look at Hengrui Pharma's profits in the last three years: 20 17, 20 18 and 20 19, which are 3.2 billion, 4 billion and 5.3 billion respectively, Fuxing Medicine 2.3 billion and 2.2 billion, and Huadong Medicine 6.5438+0.7 billion and 2.2 billion respectively. Therefore, even if Hengrui Pharma, Huadong Medicine and Fosun Pharma are given the same valuation, Hengrui Pharma is still the largest. ,

From the perspective of valuation, it is impossible for the market to give the three companies the same valuation. First, the imagination of the three companies in the future is different. Second, from the historical performance, Hengrui has higher growth. Third, from the perspective of the growth path of foreign pharmaceutical industry, the future market value growth space of enterprises producing innovative drugs is also the largest. Therefore, the market will give more imagination to the future and give innovative drugs with mature market experience higher growth and higher valuation. At present, the dynamic PE valuation of the three also supports this view. As of February 20th, 20021year, the dynamic PE of Hengrui Pharma was 98 times, that of Fuxing medicine was 37 times, and that of Huadong medicine was 17 times. Judging from the relative valuation of the pharmaceutical industry, East China Medicine is definitely undervalued, but we can't look at the stock from the absolute PE valuation. If we follow this logic, the valuation of banks, real estate and insurance will be lower.

From the perspective of main business, Hengrui Pharma's main business is anti-tumor drugs, anesthesia, contrast agents and so on. And the gross profit margin of the product is above 75%, and the gross profit margin of the main anticancer drugs is as high as 93%. Fuxing medicine's products are miscellaneous, accounting for non-high gross profit margin anticancer drugs, but the gross profit margin of anti-infection and digestion-related drugs, including raw materials and drugs, is only 27%. There are relatively many products and different gross profit margins, which will lower the overall gross profit margin. Finally, East China's pharmaceutical revenue accounts for the largest proportion. Since it is business, it is not surprising. Because pharmaceutical companies do business instead of drugs, their gross profit margin is only 7.58%. Even if the gross profit margin of other drugs and medical beauty is high, its overall gross profit margin is definitely the lowest among the three.

Finally, the national policy and the dividends of related industries, and the quantity procurement affect many pharmaceutical and medical device companies. However, the state does spare no effort to encourage and support innovative drugs. Coupled with the concept of domestic substitution and the aging population in the future, the research and development of innovative drugs will be stimulated by both demand and policy. As the leading enterprise with the strongest R&D strength of innovative drugs in China, Hengrui Pharma is particularly scarce and irreplaceable. However, the main product of East China Medicine, oral diabetes medicine itself, is facing the competition from many substitute products, and the layout of medical beauty may promote the company in the future, but at present, the market is facing the competition from leading Huaxi Bio and Aimeike.

Finally, from the profit point of view, Hengrui's profit is the highest. Judging from the valuation, Hengrui has the characteristics of high growth, sustainability and certainty. Stimulated by the aging population and domestic substitution policy, the market is more willing to give it a higher valuation. From the perspective of industry competition, Hengrui, as the leader of innovative drug research and development in China, has entered clinical trials with a large number of follow-up products. The technical barrier of anticancer drugs is relatively high, which determines its high gross profit margin. Once the products are approved for marketing, they can be released quickly. It is normal and reasonable that the market value is higher than the other two companies when the profit is relatively high and the market valuation is higher than the other two companies.

Heavy positions in Huadong medicine, low valuation, profit growth year by year.

Almost revenue does not mean that profits will be almost the same, and almost profits do not mean that profits are almost the same.

To some extent, the market value represents the market's expectation for the future of listed companies, which is a psychological expectation. This is why some companies have a particularly high P/E ratio, while others have only a single digit P/E ratio. Therefore, under the same circumstances, the higher the market expectation of a company, the greater the market value naturally.

So what will affect market expectations? That's the future space. This future can be seen from the composition of profits. Let's talk about Fosun Pharma:

Fosun Pharma's income composition largely comes from its pharmaceutical business. It holds 50% of the shares of Sinopharm Holdings, which will naturally be consolidated financially. Therefore, a large part of the revived revenue is the pharmaceutical business that Sinopharm Holdings does not make money. Although the pharmaceutical business has a large revenue, the gross profit margin is too low, the competition is fierce and the growth is weak, so it will naturally not be overvalued.

There is little difference in East China medicine, and the pharmaceutical business accounts for a high proportion in its revenue. Gross profit margin is less than 8%. Moreover, in the drugs produced by East China Medicine, generic drugs account for a large proportion. With the deepening of medical insurance reform, the profits of generic drugs will gradually decrease, almost completely becoming pharmaceutical industrial products. Pharmaceutical companies in China are too comfortable to lie on the dividends of generic drugs, and have no intention of making innovative drugs. The profit of generic drugs is even higher than that of original drugs. The operation of East China Medicine can be described as arrogance. In centralized mining, as a manufacturer of acarbose glycogen drugs, the quotation is 0. 18 yuan/tablet; The price of green leaves is 0.32 yuan/piece. As a generic drug, Huadong Medicine actually reported 0.47 yuan/tablet, which is higher than Bayer 16 1% in Germany! ! ! In the end, it is naturally impossible to be shortlisted. East China medicine was swept out of its core products, so its share price began to fall. However, its core lies in enjoying the dividend of generic drugs for a long time, and paying insufficient attention to the original drugs. When the general dividend is no longer, the revenue profit will naturally be hit hard.

In contrast, although there are many generic drugs in Hengrui Pharma and Hengrui Pharma, their revenues are more reasonable. Its three main products are antineoplastic drugs, anesthetics, contrast agents and generic drugs, but there are also many original drugs. Anesthetics belong to 1 controlled drugs in China, and they are not involved in centralized procurement at present. And Hengrui Pharma is particularly willing to invest in research and development. In the first half of this year alone, the R&D investment was as high as 654.38+08 billion, while in the same period, the R&D expenditure of East China medicine was 479 million, almost only a quarter of that of Hengrui Pharma. Under such a huge gap, the speed of listing new drugs is naturally greater, and investors are naturally not optimistic about East China.

To sum up, stock investment invests in the future. There is a big gap between East China Medicine, Fosun Pharma and Hengrui Pharma in gross profit margin and growth. Even if there is little difference in revenue, due to the different composition of revenue, the profit naturally varies greatly, which eventually leads to a large gap in market value.

Because of centralized procurement, generic drugs have no future, and the road to transformation of East China medicine is late.

On top of R&D revenue, we can find that Fosun's revenue has been far ahead of Hengrui and East China in recent years. Why is the total revenue so high and the net profit not so high? Fosun spends the most money on advertising promotion, spending 5.5 billion on advertising every year! In order to seize the market, Fosun Pharma has been promoting innovative drugs! In the future efforts to increase income, it is not a dream to surpass Hengrui to become the leader of innovative drugs. I wish you a bright and prosperous future! Fosun, on the other hand, is relatively dependent on mergers and acquisitions, which can increase its performance in the short term, but its more than 50 holding or shareholding companies have also led to a surge in goodwill. Wanda's transformation and revival should learn from it! In any case, it is worthwhile to invest in companies that strive to change their progress. We all hope that the stocks we buy will skyrocket, but it still depends on the recognition of the market! The only power for the market to recognize is to hand over a satisfactory answer sheet.

East China medicine has a high income, but most of it is pharmaceutical business. A small part is drug research and development. Most of the income comes from low-profit drugs, and the valuation certainly can't go up.