\u3000\u3 Jiangsu Eastern Shenghong Co.Ltd(000301) 047 Sino Biological Inc(301047) )
Event: the company released its annual report for 2021. The annual operating revenue was 965 million yuan (- 39.53%), the net profit attributable to the parent company was 720 million yuan (- 36.15%), and the net profit attributable to the parent company after deduction was 597 million yuan (- 46.81%). The company plans to distribute a cash dividend of 100.00 yuan (including tax) for every 10 shares and increase 9 shares for every 10 shares to all shareholders with capital reserve. The overall performance is in line with expectations.
The revenue of conventional products maintained rapid growth, and the revenue of covid-19 related products decreased. In terms of revenue split, the annual revenue of non covid-19 related products was 359 million yuan (+ 41%), covid-19 related products was 606 million yuan (- 55%), Q4 non covid-19 related products was 91 million yuan (+ 41%), covid-19 related products was 61 million yuan (- 87%), and non covid-19 virus related businesses maintained sustained and rapid growth. In the past 21 years, the company has continuously enriched the types of reagent products and added more than 1500 kinds of biological reagents such as on-line proteins and antibodies; The company has successively established subsidiaries in Taizhou, Suzhou and Japan, and its conventional business is expected to maintain stable growth in the future. In the past 21 years, the company’s technical service business revenue represented by antibody development, virus clearance and verification and cell bank detection also achieved rapid growth, reaching 88 million yuan (+ 73.69%) in the whole year.
R & D expenditure increased, and government subsidies increased the apparent net interest rate. Throughout the year, the company’s overall gross profit margin was 93.97% and Q4 was 88.42%. Affected by the change in the proportion of covid-19 related product revenue, it fell year-on-year; The gross profit margin of recombinant protein and antibody reagent business remained above 93%. In terms of expenses, from the absolute value, the sales / management / R & D expenses were – 12% / + 30% / + 54% year-on-year respectively. The financial expenses were converted into income due to the listing and fund-raising and the improvement of profits. On the whole, the expenses were well controlled and the R & D expenses increased rapidly to support the research projects such as new reagents and diagnostic raw materials. The net profit attributable to the parent company of Q4 on the profit side was 164 million yuan (- 56.59%), of which the non recurring profit and loss was about 87 million yuan (most of which were government subsidies and financial investment income). The corresponding net profit attributable to the parent company after deduction was 50.32% and 61.80% for the whole year, which was roughly the same as that in the first three quarters.
Maintain the “overweight” rating. The company is a leading enterprise in domestic protein research reagents. Relying on a comprehensive technical platform, the company builds a rich library of recombinant protein and antibody products. Benefiting from the R & D needs of downstream industrial enterprises and scientific research institutions and the domestic substitution trend under the trend of high quality and low price, the market share is expected to continue to increase in the future. It is estimated that the net profit attributable to the parent company in 22-24 years will be 583 / 572 / 641 million yuan, corresponding to 39 / 40 / 35 times of the current PE, maintaining the “overweight” rating.
Risk tip: the customer expansion is less than expected, the order volume is less than expected, the development of new products is less than expected, and the price drop is more than expected.
