\u3000\u3000 Porton Pharma Solutions Ltd(300363) (300363)
Event: the company announced that it had received a new batch of purchase orders from Pfizer Ireland pharmaceuticals, a multinational pharmaceutical company, and the company would provide contract customized R & D and production (cdmo) services. As of the disclosure date of this announcement, the total amount of newly obtained orders was USD 681 million, exceeding 50% of the audited operating revenue of the company in the latest fiscal year.
Viewpoint: major contracts continue to confirm the company’s ability. The company’s annual order revenue exceeded US $8.1 billion and the annual forecast revenue exceeded US $3.1 billion in 2026! According to Pfizer’s latest annual report, we speculate that this order is covid-19 small molecule paxlovid. Pfizer expects that the variety sales will exceed 22 billion US dollars in 2022. The company continues to consolidate the stable business partnership established with key customers through technology and service capabilities. The signing of this major contract is a proof of the company’s ability, reflecting the stickiness of service and the leading advantage of business. This order will greatly boost the performance growth in 2022 and help the company to several levels.
About the impact of large orders on the company: there is no doubt that large orders have brought short-term performance explosion. The market may worry about sustainability, but we think it should be considered from the perspective of long-term growth and capacity. According to the current situation of covid-19, we do not think that covid-19 small molecules can only be supplied for one year.
Capacity matching: the company acquired Hubei Yuyang Pharmaceutical Co., Ltd. in Q3 in 2021 for 172 million yuan, realizing a total capacity of more than 2000m3 (1400m3 in the interim report) in three API cdmo production bases, laying a solid foundation for business development and rapid growth. On the evening of February 10, the company also announced that it would invest 260 million yuan to expand the cdmo capacity of API located in Changshou production base (the planned reactor volume is 142.6 cubic meters), which is expected to be put into operation in March 2023 to support the business development in 2023 and beyond.
The re signing of major contracts continues to confirm our industrial trend and the judgment that covid-19 supply chain will continue to exceed expectations. The market generally believes that Porton Pharma Solutions Ltd(300363) is the second line of cdmo, but we believe that after two years of continuous and in-depth cdmo strategic transformation, the company’s technical capacity, technical reserves and customer coverage have gradually moved closer to the first line, and the gap is becoming smaller and smaller. The signing of small molecule major contracts fully confirms our judgment. The CDMO industry is a rare policy haven, and benefited from industrial transfer, favorable policies and innovative R & D wave. It is now a golden period of growth. The company is gradually gaining the first tier in China.
Profit forecast and investment rating. Based on the signing of major contracts, we raised the profit forecast again. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 521 million yuan, 1178 million yuan and 1.6 billion yuan respectively, with an increase of 60.7%, 125.9% and 35.8% respectively. EPS is 0.96 yuan, 2.17 yuan and 2.95 yuan respectively, and the corresponding PE is 64x, 28x and 21x respectively. The current valuation growth rate highlights the cost performance. Based on the forward-looking layout of gene cell therapy, we think we can give the company a valuation premium. We are optimistic about the long-term development of the company and maintain the “buy” rating.
Risk warning: commercial order fluctuation risk; Risk of increased proportion of key customers and core products.
