Porton Pharma Solutions Ltd(300363) (300363)
Looking back on the past: in the era of boten 1.0, excellent CMO service providers have high prosperity
1) Track selection: in 2021, the global CMO / cdmo outsourcing market space for small molecule chemicals will be about US $42 billion, which is expected to increase to US $82.2 billion by 2030. The huge market space gives boten the opportunity for rapid development. 2) Building a cornerstone: the company deeply builds a five in one core technology platform, a quality system in line with the standardized market and the cultivation of overseas key customers. Starting from these three dimensions, the company establishes a deep moat to lay a solid foundation for future sustainable development. 3) High growth: from 2009 to 2016, the company’s revenue and profit maintained a growth trend. In 2016, the company achieved a revenue of 1.33 billion yuan and a net profit attributable to the parent company of 170 million yuan. The volume of revenue ranked first among CMOS in China. From 2019 to 2021q3, the company achieved remarkable strategic transformation, maintained a compound growth rate of more than 30% on the revenue side, and the profit growth rate was faster than the revenue.
Shaping the present: in the era of boten 2.0, strategic upgrading, excellent cdmo service providers accelerate their growth
1) Industrial chain extension: in 2017, J-star was acquired to create a cro + CMO one-stop service industrial chain. The product pipeline reserves tended to be enriched and the anti risk ability was greatly improved. In the first half of 2021, there were 428 active project pipelines. The number of clinical phase II and previous projects maintained an annual growth rate of about 20%, the number of clinical phase III and even commercial CMO projects increased by about 10%, and the overall number of projects increased by about 16%. 2) Strategic upgrading: after 2017, we will comprehensively improve the capability circle from the four dimensions of company positioning, customer extension, product upgrading and business layout, and enter the stage of rapid development.
Interpretation of the future: in the era of boten 3.0, Trinity international cdmo service providers welcome a new wave
1) API cdmo: the driving force of short-term performance growth, the continuous improvement of API commercialization ability, the acceleration of product structure upgrading, and the capacity of nearly 2000m3 in the three production bases to meet the diversified needs of customers. 2) Preparation cdmo: medium and long-term growth point. The API + Preparation integrated service mode deepens the moat. The R & D and commercial production capacity of preparation laboratory are under active construction, and the future can be expected. 3) Biological cdmo: a medium and long-term growth point with huge precision card space, which does not meet the outsourcing blue ocean market – cell gene therapy track. The three-stage capacity circle of boten biology is increasing step by step. It is expected to become the first echelon of global cell gene therapy cdmo after 2025.
Investment advice
After boten 1.0 era and 2.0 era laid a solid foundation, the company’s performance acceleration trend in 2022 is clear, lighting up the boten 3.0 era. 1) API cdmo: most of the production capacity of Yuyang pharmaceutical acquired in August this year will be released in 2022. With the upgrading of project structure, API cdmo has entered the performance acceleration period. 2) The commercial capacity of preparation cdmo and cell gene therapy cdmo will be released successively in 2022, bringing medium and long-term business growth points. We estimate that from 2021 to 2023, it is expected to be RMB 493 million, RMB 707 million and RMB 979 million respectively, with a year-on-year increase of 52%, 43% and 38%, which is adjusted from “cautious recommendation” to “recommendation”.
Risk statement
The risk of performance falling short of expectations, exchange rate fluctuation risk, new business investment risk and fixed asset investment risk.
