Porton Pharma Solutions Ltd(300363) (300363)
Event: on November 30, 2021, the company received a new batch of purchase orders from a large pharmaceutical company in the United States, which are contract customized R & D and production (cdmo) service orders related to a small molecule innovative drug. The company has received a total order amount of 217 million US dollars for related products, exceeding 50% of the company’s audited operating revenue (2.03 billion) in the latest fiscal year.
Viewpoint: large orders show the company’s ability and are expected to drive the rapid growth of performance
Large orders show the company’s ability and continue to be recognized by key customers. The company’s order amount was 217 million US dollars, more than 50% of last year’s annual revenue. 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. We expect that this year will mainly be the confirmation of a small number of clinical orders, and the bulk of commercial supply will be next year.
The signing of major contracts once again confirms our industrial trend judgment. The general trend of cdmo industrial transfer has been established and the high-profile atmosphere continues. The cdmo industry is expected to maintain a high outlook in the next three years, The epidemic has accelerated the transfer of overseas industries to China (from the perspective of supply chain stability, enterprises that used to choose European suppliers tend to increase Chinese suppliers). Excellent cdmo companies have both technical advantages and integrated R & D capabilities, and can meet the personalized needs of different types of customers. In 2020, the industrial transfer will mainly focus on small intended orders, and the transfer of real commercial large orders will come from 2021 to 2022, Therefore, the high outlook in the sub field continues, and the high-quality company is always strong. 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 this major contract 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.
Capacity expansion provides power for subsequent growth. Q3 acquired Hubei Yuyang Pharmaceutical Co., Ltd. for 172 million yuan, realizing that the total capacity of three API cdmo production bases exceeds 2000m3 (1400m3 in the interim report), laying a solid foundation for business development and rapid growth.
Re sort out the company’s investment logic. Looking at the three years, the company is expected to continue to grow rapidly (we expect the compound growth rate of revenue to be 30% +, with the release of production capacity and the improvement of profitability, the profit growth will be faster than the income growth, and the compound growth rate of profit will be 40% +). Looking at the five-year dimension, the company’s gene and cell therapy cdmo is expected to blossom and bear fruit. If the gene and cell therapy cdmo progresses smoothly, it is expected to replicate the brilliance of YaoMing biology.
Profit forecast and investment rating. Based on the signing of major contracts, we raised our profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 490 million yuan, 888 million yuan and 1069 million yuan respectively, with an increase of 51.1%, 81.1% and 20.4% respectively. EPS is 0.90 yuan, 1.64 yuan and 1.97 yuan respectively, and the corresponding PE is 111x, 61x and 51x respectively. Based on the prospective layout of gene cell therapy, a valuation premium can be given. 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.
