\u3000\u3000 Wuxi Apptec Co.Ltd(603259) (603259)
Key investment points
Event: on February 15, 2022, the company issued a performance express, which realized a revenue of 22.902 billion yuan (+ 38.5%, the year-on-year growth rate in brackets, the same below); The net profit attributable to the parent company was 5.097 billion yuan (+ 72.19%); Deduct the net profit not attributable to the parent company of RMB 4.064 billion (+ 70.38%); The adjusted non IFRS net profit attributable to the parent company of core performance indicators was 5.131 billion yuan (+ 41.08%).
The performance slightly exceeded market expectations, and crdmo business continued to play a strong driving force. The company’s revenue in Q4 of 2021 was 6.381 billion yuan (+ 35.2%), and the adjusted non IFRS net profit attributable to the parent company was 1.32 billion yuan (+ 21.4%), and the performance slightly exceeded the market expectation. In terms of business, the company’s chemical business achieved a revenue of 14.087 billion yuan (+ 46.93%, including small molecule drug discovery + 43.24%, process R & D and production + 49.94%) in 2021. Considering covid-19 orders, the growth rate in 2022 is expected to double compared with that in 2021; The test business achieved a revenue of 4.525 billion yuan (+ 38.03%); Biology business achieved a revenue of 1.985 billion yuan (+ 30.05%); Ctdmo business of cell and gene therapy achieved a revenue of 1.026 billion yuan (- 2.79%), with a year-on-year increase of 87% in China; China’s new drug R & D Service Department achieved a revenue of 1.251 billion yuan (+ 17.47%). The main performance drivers of the company come from the chemical business and the rapidly growing testing business. The company continues to build an “integrated, end-to-end” crdmo business, with strong order demand. In 2021, there were more than 1600 new customers and more than 5700 active customers. The retention rate of the top ten customers was 100%, showing the company’s strong customer stickiness.
New businesses continue to achieve breakthroughs and help the company develop at a high speed in the future. In terms of chemical business, 732 molecules were added to crdmo pipeline, with a total of 1666 molecules throughout the year, including 42 commercialized, 49 in phase III, and 99 oligonucleotide and polypeptide drug projects; In terms of testing business, by the end of 2021, the company has 110000 square meters of laboratories, which is expected to increase to 165000 square meters in 2023, and the number of animal houses is expected to increase from 450 in 2021 to 750 in 2023; The synergy between biological business and chemical business is significant, and the proportion of customers using wuxichemistry and wuxibiology at the same time is more than 70%; In terms of cell gene therapy, there are 53 preclinical and phase I projects, 8 phase II projects and 11 phase III projects in 2021. Four projects are about to submit listing applications. It is expected to usher in commercial cgtcdmo projects from 2022 to 2023, contributing performance flexibility to the company; There are 232 projects in progress in ddsu business, of which one project is in NDA stage and three projects are in clinical phase III. The company’s performance blossoms at many points. In the future, it is expected to continue to lead the industry in emerging businesses and lay a solid foundation for high performance growth.
The momentum of acquisition + extension of the company continues to grow. On August 3, 2021, the company completed the acquisition of Bristol Myers Squibb’s preparation production base in kuwei, Switzerland, and began consolidation in July. Kuwei base has become the first production base of Hequan pharmaceutical in Europe, strengthening the layout of the company in the field of preparation cdmo business. On September 24, 2021, the company completed the land acquisition in Delaware. Under the condition of high capital expenditure + epitaxial acquisition, the company’s production capacity expanded significantly, providing sufficient momentum for future performance growth.
Profit forecast and investment rating: considering the company’s covid-19 large orders, we raised the forecast of the company’s net profit attributable to the parent company from RMB 4.913/58.67/7.447 billion to RMB 5.097/86.33/10.406 billion in 2021-2023. The current market value corresponds to 54 / 32 / 27 times of PE in 2021-2023, maintaining the “buy” rating.
Risk warning: capacity expansion is less than expected, exchange profit and loss risk, etc.
