Concept stocks are like a gust of wind, so please be careful when taking action

It's hard to say how big the “COVID-19 drug” market can be, but at a time when the domestic epidemic is still severe, the capital market is still optimistic.

On May 11, the Hong Kong A-share COVID-19 treatment concept was raised. On the Hong Kong side, Fosun Pharmaceuticals$FOSUN PHARMA (02196.HK)$Up more than 11%, Junshi Biotech rose more than 5%; in terms of A-shares, Xinhua Pharmaceuticals$Shandong Xinhua Pharmaceutical (000756.SZ)$, China Resources Shuanghe went up and down, Shanhe Pharmaceutical rose more than 12%, Fosun Pharmaceuticals, Shanghai Pharmaceuticals$SH PHARMA (02607.HK)$It rose more than 6%, followed by Yuekang Medical and Liansheng Chemical.

Although related concepts are constantly popping up, the most noteworthy one is China Resources Shuanghe. Previously, due to rumored collaboration with Real Life, China Resources Shuanghe's stock price rose 135% within two months. When China Resources Shuanghe took the real creature in the midst of popular demand, many shareholders shouted, “We'll just wait for the digital board next.” As of the closing of the market on the morning of the 11th, the total market value of China Resources Shuanghe had broken 38 billion yuan.

It is worth noting that China Resources Shuanghe is not the only company that has partnered with Real Life. On April 26, Xinhua Pharmaceutical issued an announcement stating that it had strategic cooperation with Real Biotech to win the production and distribution rights of azvudine. The stock price rose and stopped 10% on the same day. Since then, it has recorded 6 consecutive ups and downs.

Judging from the overall performance, China Resources Shuanghe's performance in the past two years is simply worrying.

According to public information, in 2020, China Resources Shuanghe's net profit attributable to shareholders of listed companies was about 1.05 billion yuan, down 4.74% year on year; operating income was about 8.504 billion yuan, down 9.35% year on year; basic earnings per share were 0.9635 yuan, down 4.74% year on year.

A year later, China Resources Shuanghe's net profit not only did not stop falling, but instead expanded further. According to financial data, in 2021, China Resources Shuanghe achieved operating income of 9.112 billion yuan, an increase of 7.14% year on year; net profit to mother was 936 million yuan, down 6.91% year on year. In response, the company explained that due to the collection of some products in the chronic disease sector, prices dropped significantly, resulting in a decline in profits.

In order to reduce the pressure on capital flows brought about by collection and “save” its declining net profit, China Resources Shuanghe continued to reduce expenses. In 2019-2021, the company's sales expenses were 3.73 billion yuan, 3,029 billion yuan, and 2,807 billion yuan respectively, a decrease of 24.75% in 2021 compared with 2019.

Looking at the details, during these three years, employee remuneration fell from 685 million yuan to 395 million yuan, conference fees fell from 473 million yuan to 71.25 million yuan, marketing expenses were directly reduced from 392 million yuan to zero expenses, and advertising expenses fell from 104 million yuan to 27.1 million yuan.

In terms of accounting treatment of R&D investment, China Resources Shuanghe has adopted a more aggressive accounting policy. The company invested 411 million yuan in R&D in 2020, of which 120 million yuan was invested in capitalized R&D, and 29.21% was capitalized; in 2021, 640 million yuan was invested, of which 230 million yuan was invested in capitalized R&D, and 35.98% of the capitalized R&D investment.

In addition, China Resources Shuanghe also chose to get a share of the pie as the domestic COVID-19 oral medicine is about to go on sale. Under these circumstances, net profit did increase in the first quarter of 2022.

According to the data, as of the end of the first quarter of 2022, China Resources Shuanghe achieved total operating revenue of 2,518 million yuan, an increase of 4.59%; net profit to mother of 332 million yuan, an increase of 15.99%; deducted non-net profit of 318 million yuan, an increase of 19.48%; and net cash flow from operating activities was 180 million yuan, a year-on-year decrease of 44.34%.

However, judging from the gross margin data of China Resources Shuanghe's various businesses in the first quarter of 2022, the downward trend has not improved.

China Resources Shuanghe's betting on “new coronavirus drugs” has indeed opened a new window for the company's performance growth in a short period of time. However, “concept stocks, a gust of wind”. Currently, China Resources Shuanghe's performance has not improved, and the market certainly doesn't have much confidence or too long to wait.

239K Views