Asymchem Laboratories (Tianjin) Co.Ltd(002821) (002821)
matter:
The company announced that it would sign a supply contract again, equivalent to about RMB 2.720 billion, which will be delivered in 2022.
Ping An View:
Strengthen capacity supply in multiple ways to ensure order execution:
The newly signed order is estimated to be the same product as the large-scale order announced before, and the delivery quantity is huge. A large number of orders need to be delivered during 2022, which poses a challenge to the company’s production capacity. We have repeatedly suggested that the company’s capacity landing is accelerating. On this basis, the company has also taken a variety of ways to further improve its supply capacity to meet the sharply increasing order demand. We are optimistic about the pace of order fulfillment next year.
1) The early steps of this large-scale order can use new technologies such as continuous reaction, and the unit output value is high; 2) Due to the early communication preparation, the company has made preparations for the supply of raw materials in advance. While ensuring the purchase of raw materials, some early steps will be completed outside the body to use its own production capacity on the blade; 3) Due to the huge supply scale, it is expected that the production of this product will be completed in a specific workshop, and the time will run through the whole year of 2022. Compared with general cdmo orders, the workshop does not need project switching and corresponding reactor cleaning, and the overall operation efficiency is expected to be at a high level.
China’s business is in the early stage of large volume, and it is expected that large orders will have a limited impact on other projects:
In addition to the recently signed large orders, the company’s China business is also commendable. Since 2019, the company’s business in China has gradually increased in volume. At present, the number of projects in NDA stage continues to increase, which has become an important part of performance growth. Tianjin plant 3 of the company is mainly used for the production of API projects in China. In 2021, new production capacity will be put into operation in Tianjin plant 3. Therefore, we estimate that the above-mentioned large orders have a limited impact on other projects, especially Chinese projects, and other orders will not decline or stagnate due to the implementation of large orders.
Raise the profit forecast and maintain the “strongly recommended” rating: sign new large orders again, strengthen the follow-up performance again, and continue to be optimistic about the cdmo track and the sustainable development of the company. Raise the EPS forecast for 2021-2023 to 4.11, 8.61 and 9.95 yuan (original 4.11, 6.55 and 8.16 yuan), and maintain the “strongly recommended” rating.
Risk tips: 1) if the global investment and outsourcing ratio of innovative drugs is lower than expected due to insufficient income risk ratio of innovative drugs and international political environment, the development of CMO industry will be affected; 2) The failure of drug research and development will lead to the termination of the project and the loss of corresponding orders by CMO; If the marketing of drugs is less than expected, the corresponding CMO orders will not be able to achieve large volume; 3) Orders and even customers may be lost due to production accidents, receiving warning letters from regulatory authorities or other situations that can not meet customers’ needs; 4) The main customers are from Europe and the United States. Orders are denominated in foreign currencies. Exchange rate fluctuations will cause exchange gains and losses.
