Reporter Su Hao and Cao Xueping report from Beijing.
Recently, Nanjing Jianyou Biochemical Pharmaceutical Co., Ltd. *** 603707SH, hereinafter referred to as "Jianyou shares") issued a pre-loss announcement for its 2023 annual results. According to the announcement, according to the preliminary calculation of the financial department, the company's net profit attributable to shareholders of listed companies in 2023 is expected to be -200 million yuan to -100 million yuan, and the net profit attributable to the parent company is expected to be -2300 million to -1300 million yuan.
On the same day, Jianyou also issued the "2023 Annual Proposed Provision for Inventory Price Decline", the company conducted a preliminary impairment test on the inventory as of December 31, 2023, and the company's 2023 annual inventory price decline provision of 1 billion yuan to 1.2 billion yuan, which is expected to lead to a decrease in net profit attributable to shareholders of listed companies by 8500 million yuan to 10200 million yuan.
The reporter of China Business News noticed that in 2023, due to the foreign digestion inventory of heparin APIs and changes in the heparin preparation market in some countries, the demand for heparin APIs will decline, and heparin will plummet. In October 2023, the average unit price of China's heparin exports was close to a record low. At the same time, the huge amount of inventory impairment directly led to the "polar reversal" of the company's profit level.
In order to understand the specific impact of the heparin industry's "destocking" situation on the company, the reporter of this newspaper recently sent a letter to Jianyou for an interview, but as of press time, no further response has been received from the company.
The impairment of the inventory exceeded 1 billion
It is understood that Jianyou Co., Ltd. is a pharmaceutical enterprise integrating drug research and development, production and sales, the company has been engaged in the production of heparin APIs for more than 20 years, and is one of the world's most important heparin API manufacturers.
The inventory of Jianyou Co., Ltd. is mainly composed of raw materials, inventory commodities and products in progress, the raw materials are mainly crude heparin products, and the inventory commodities are mainly standard heparin raw materials and heparin preparations. In recent years, the book value of Jianyou's inventory has increased from 129.4 billion yuan continued to soar. As of the end of 2023, the book balance of Jianyou's inventory (unaudited) is as high as 543.9 billion yuan, of which inventory goods accounted for the largest proportion, 6455%, and raw materials accounted for the second, at 2631%。The value of inventory goods increased by more than $1 billion from the end of 2022, accounting for an increase of 2143 percentage points.
As for the reason for the large-scale inventory impairment, Jianyou said in the announcement that it was mainly affected by the heparin industry. According to the announcement, in the context of global public health events in the past two years, the global production capacity has been greatly reduced, and the global drug chain has been greatly challenged.
However, with the gradual recovery of the global ** chain, the main downstream customers of the pharmaceutical industry have adjusted their inventory strategies and returned to normal from relatively cautious high inventories, and the downstream enterprises of heparin are facing the status quo of destocking, and the demand for upstream products has declined to a large extent, the competition has intensified, and the heparin industry has been affected to a certain extent.
Jianyou pointed out that in the first three quarters of 2023, the heparin API business was generally stable. "Since the fourth quarter of 2023, heparin products** have begun to decline rapidly, according to customs data statistics, there has been a significant decline after October this year, and the average heparin export in October and November has dropped sharply by about 45 year-on-year1% and 333%, which has shown a trend of both volume and price decline. ”
Wind data shows that in July 2023, the average export price of heparin in China was US$11,779 kg, but the export volume in that month was only 5 tons, which was at a historical low. In the months that followed, exports rebounded, but average prices continued to fall. The average price in October and November fell to $4,805 kg and $6,116 kg respectively, a year-on-year decrease of about .3%, which is currently down 61% from the high point in 2021, showing a trend of both volume and price decline.
The company prepares warehouses according to the normalization of industry chain management, but due to the frequent price reductions in the above-mentioned markets, unstable orders and reduced demand, the net realizable value of some inventory products and raw materials is lower than the book value. If there are signs of impairment of the inventory and raw materials of related products, the company intends to make provision for the decline in the value of the corresponding inventory according to the principle that the carrying amount of the relevant inventory is higher than the net realizable value. Jianyou shares said.
On January 12, 2024, a regulatory work letter was issued to Jianyou Co., Ltd. for the company's performance pre-loss and inventory impairment.
Heparin is trapped in the cycle
Relevant data show that heparin is a natural anticoagulant, which is clinically used for anticoagulation and antithrombosis, and the market demand is relatively stable.
At present, human heparin is mainly extracted from the mucosa of the small intestine of pigs, therefore, its yield and production are affected by pig production, environmental protection policies, and thus show a certain periodicity.
According to a recent research report by Ping An**, the current heparin** has fallen rapidly, which is the same as the heparin** level in 2018, and is in the endpoint range of the second round of heparin cycle. In this context, not only Jianyou shares, but also a number of heparin industry chain enterprises are also affected by the heparin industry, especially heparin API companies with high inventories will face greater cost pressure.
From the perspective of inventory scale, in addition to Jianyou shares, Changshan Pharmaceutical (300255SZ), Qianhong Pharmaceutical (002550SZ) and Hepalink (002399SZ) has high inventories, and the three companies are also the leading enterprises in the export of heparin APIs and preparations.
As of the end of September 2023, the carrying value of inventories of the above three companies was 232.3 billion yuan, 67.5 billion yuan, 780.5 billion yuan, accounting for the total assets of each company79%。
On January 30, 2024, Changshan Pharmaceutical issued the "2023 Annual Results Pre-loss Announcement", the company expects to achieve a net profit attributable to shareholders of listed companies of -100,000 yuan to -120,000 yuan in 2023, and a net profit of -10 yuan after deducting non-recurring gains and losses20,000 yuan to -1220,000 yuan.
As for the reasons for the change in performance, Changshan Pharmaceutical said in the announcement that about 60%** of the company's operating income in 2023 will be sold in domestic heparin preparation products. Due to the impact of the eighth batch of national centralized drug procurement and the centralized drug procurement policy in some provinces, the company's heparin preparation product sales have declined significantly, resulting in a decline in the company's revenue and gross profit margin, resulting in a decline in the company's net profit.
At the same time, in the past few years, due to the impact of global public health emergencies, countries have increased their reserves of heparin raw materials to meet clinical needs. In 2023, the demand for heparin has returned to normal, foreign customers are adjusting their inventory strategies and first-chain solutions, and customers are facing the current situation of digesting inventory, resulting in a decline in the procurement demand for heparin APIs; The competition in the heparin API market at home and abroad is fierce, and the heparin API has dropped significantly. The sales volume and sales** of the company's heparin API decreased significantly year-on-year, resulting in a year-on-year decline in the company's operating income and net profit.
The day after the release of Changshan Pharmaceutical's performance forecast, Hepalink, another heparin leader, also released its 2023 performance forecast. The company expects to achieve a net profit attributable to shareholders of the listed company of -6 in 2023$4.7 billion to -92.4 billion yuan, net profit after deducting non-recurring gains and losses was -6$4.4 billion to -9$2.1 billion.
Hepalink attributed the reason for the change in performance to the impact of the destocking situation of the heparin industry.
Hepalink said in the announcement that in 2023, the heparin industry will continue to face the severe challenge of terminal destocking, the world's major heparin companies have generally slowed down the pace of production, the order demand for heparin API has declined sharply, and the export data of China's heparin API has declined far more than industry expectations, and the company's API business has also been greatly impacted. At the same time, due to the impact of destocking, the company's preparation business in non-European and American overseas markets also showed a certain degree of decline.
Since the fourth quarter of 2023, the selling price of heparin products has declined significantly, and some heparin products in the company's heparin industry chain inventory have shown signs of impairment in the fourth quarter of 2023. Therefore, the amount of inventory depreciation provision to be accrued by the Company in 2023 is RMB7500 million yuan to 9500 million yuan, which is expected to result in a decrease in net profit attributable to shareholders of the listed company by 6300 million to 800 million yuan. Hepalink said.
Editor: Cao Xueping Proofreader: Yan Jingning).