\u3000\u3000 Pharmablock Sciences (Nanjing) Inc(300725) (300725)
Event overview
On January 26, 2022, Pharmablock Sciences (Nanjing) Inc(300725) released the performance forecast for 2021: the company expects to achieve an annual operating revenue of 1.176 billion yuan - 1.227 billion yuan, with a year-on-year increase of 15% - 20%; It is estimated that the net profit attributable to the parent company in the whole year will be 479 million yuan - 497 million yuan, with a year-on-year increase of 160% - 170%; It is expected that the net profit of non parent company deduction in the whole year will be RMB 226 million-243 million, with a year-on-year increase of 30% - 40%.
Affected by the phased epidemic on the income side, the gradual release of new production capacity is expected to drive accelerated growth
It is estimated that the operating revenue will be 1.176 billion yuan to 1.227 billion yuan in 2021, with a year-on-year increase of 15% - 20%. Quarterly, Q4 is expected to achieve revenue of RMB 273 million to RMB 324 million, with a year-on-year change of - 8% - 9%. We believe that the company's revenue side growth rate failed to achieve better than expected performance, mainly due to: 1. There was no new capacity in 2021, and the company has been in a state of capacity tension. 2. Affected by the epidemic situation, power and production restriction and government inspection of the production base, the company failed to realize the full load operation of production. 3. The quarterly fluctuation of large order delivery also causes the fluctuation of the revenue side.
Due to the increase of expenses and the impact of exchange rate, the performance of profit side is under pressure
It is estimated that the net profit attributable to the parent company in the whole year will be 479 million yuan - 497 million yuan, with a year-on-year increase of 160% - 170%; It is expected that the net profit of non parent company deduction in the whole year will be RMB 226 million-243 million, with a year-on-year increase of 30% - 40%. Quarter by quarter, Q4 is expected to realize the deduction of non parent company profit of 24.83 million yuan to 42.18 million yuan, which has declined year-on-year and month on month. The gross profit margin in 2021 has maintained a stable increase compared with that in 2020, which clearly shows that the overall operation efficiency of the company is gradually improving. In addition, the impact of non recurring profit and loss on net profit in 2021 is expected to be about 250 million yuan - 260 million yuan, mainly due to the company's acquisition of 16.5% equity of Zhejiang Huishi, an associate in April 2021. We believe that the performance of Q4 parent company profit is lower than expected, mainly due to: 1. The average exchange rate of USD to RMB in 2021 decreased by 6.9% compared with the previous year, which has a certain negative impact on the company's operating revenue and net profit. 2. Q4 accrued employee year-end bonus and executive bonus, resulting in a significant increase in the cost side.
The company has comprehensively transformed into a platform cdmo, which can be expected in the future
2022 ushers in a period of high matching between production capacity and orders. In terms of production capacity, in 2022, two workshops of Zhejiang Huishi were put into operation one after another, breaking through the capacity bottleneck restricting the rapid development of the company. In terms of orders, after Zhejiang Huishi passed the FDA audit in 2019, the company is also actively arranging the API business segment at the GMP level. Driven by the diversion of molecular blocks in the original strong advantage field and the introduction of experienced cdmo executives, after three years of polishing, we believe that it is expected to usher in the rapid growth period of API orders.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 483 million yuan, 387 million yuan and 532 million yuan respectively, with a year-on-year increase of 162%, - 20% and 37%. In 2022, the company's new production capacity will be released successively and upgraded to the platform cdmo strategy. Therefore, we raise the company's rating to "recommended".
Risk warning: the risk of performance falling short of expectations, new business investment risk and fixed asset investment risk.
