\u3000\u3000 Porton Pharma Solutions Ltd(300363) (300363)
Key investment points
Event: new Pfizer orders of $681 million, delivered in 2022
On February 11, 2022, Porton Pharma Solutions Ltd(300363) announced that it had received a new batch of cdmo orders from Pfizer (Ireland branch), with a cumulative amount of $681 million, which is expected to be delivered in 2022. Based on the current production capacity and current background of the company, we believe that this order of the company or the last order of US $281 million belongs to the same customer and project, and both are in the intermediate stage.
Cashing: the new capacity increment is superimposed on the fixed asset turnover rate and then increased
The newly added capacity of Hubei Yueyu workshop in early 2021 was about 580m3, which was about 60% smaller than that of Hubei Yueyu workshop in 2021 and 2022. In combination with the increase in the turnover rate of fixed assets when the company delivered some similar orders in 2021 (from 1.59 in 2020 to 1.75 in 2021; the total amount of fixed assets includes some new business capacity that hardly contributed revenue), we believe that on the basis of the application of continuous production, the improvement of management ability and the efficient operation of 109 and other new workshops, the unit output value of this order is high Strong profitability. In 2022, the company will contribute more than expected performance by combining the new capacity increment and the further improvement of the turnover rate of fixed assets.
Significance: large orders shape cyclical stocks or capacity transition?
Some investors believe that based on the uncertainty of the continuity of large orders, the company’s performance may fluctuate greatly from 2021 to 2023. Combined with the rapid growth of fixed assets, the company’s revenue, profitability and fixed asset turnover may decline precipitously after large orders. Combined with the characteristics of the industry and the historical resumption, we believe that first of all, heavy commercial project orders have brought cash flow to the company and provided more possibilities for the company in the future, which may help the company accelerate the development of CGT and preparation business, and may also bring more new directions to the company. Secondly, large orders from large companies are important historical opportunities, which will effectively shorten the running in period with customers and provide an important basis for further acceleration in the future. In this event, we and global customers also saw China’s stable supply capacity, technical capacity, undertaking capacity and delivery capacity, as well as the significance of local supply chain to the world.
Profit forecast and valuation
Considering the delivery cycle of the company’s orders, the increase of new fixed assets and the turnover rate of fixed assets from 2022 to 2023, the company’s EPS from 2021 to 2023 was increased from 0.91, 1.27 and 1.72 yuan / share to 0.98, 2.24 and 3.24 yuan / share, corresponding to the closing price on February 11, 2022. The PE in 2022 was 27 times and maintained the “buy” rating.
Risk tips
The volatility of the impact of depreciation of new fixed assets, equity incentive and exchange on apparent performance; Volatility of profit cycle of new business; The prosperity of investment and financing of innovative drugs has declined.
