\u3000\u3 Guocheng Mining Co.Ltd(000688) 202 Shanghai Medicilon Inc(688202) )
Key investment points
Performance overview: high growth continues, and the profitability of a single quarter has reached an all-time peak
On February 27, 2022, the company released the 2021 express, realizing a revenue of 1.167 billion yuan, yoy75%, a net profit attributable to the parent company of 282 million yuan, yoy115%, a gross profit margin of 45.34%, a year-on-year increase of 4.27pct, a net profit margin of 24%, and a year-on-year increase of 3.85pct. Among them, the single Q4 achieved revenue of 381 million yuan and yoy63 million yuan 47%, with a net profit attributable to the parent company of 101 million yuan and yoy84 million yuan 88%, the gross profit margin was 47.12%, and the net profit margin was 26.51%, the highest in history, with a year-on-year increase of 2.33pct.
Q4 expense rate decreases, and the internationalization accelerates or maintains the current level in 2022
The company’s 2021q4 expense rate decreased significantly, with a year-on-year decrease of 3.06pct. We find that the company’s sales expense ratio and management expense ratio (excluding equity incentive) have gradually decreased under the scale effect since 2021. Considering the company’s international expansion and the increase of equity incentive amortization in 2022, we expect the expense rate to be basically flat in 2022, and the company’s gross profit margin and net profit margin to remain basically stable.
Orders continued to grow at a high rate, and new capacity accelerated in 2022
In 2021, the newly signed orders of the company continued to grow at a high rate, reaching 2.452 billion and yoy87.5 billion 66%。 Considering the execution cycle of the company’s business, the short-term high growth has strong certainty. By the end of 2021, the 19000 square meter animal room in Nanhui has been gradually opened, which is expected to accelerate the fulfillment of preclinical orders.
Internationalization is an important focus in 2022
We look forward to the accelerated development of the company’s internationalization after the epidemic subsides. The company has set up an international R & D department and hired Dr. Dai Xuedong, who has working experience in pharmaceutical enterprises and cros at home and abroad such as Xi’an Janssen, GSK and xenoport, as the executive vice president of the international R & D department. We expect the company’s international expansion to accelerate again in 2022 and improve the company’s international brand status and ceiling.
Profit forecast and valuation
In view of the higher than expected performance of the company’s orders on hand and profits, we raised the company’s EPS from 2021 to 2023 to 4.55, 7.92 and 12.04 yuan respectively, corresponding to 77, 44 and 29 times of the closing price PE on February 25, 2022. Maintain the “overweight” rating with reference to the higher growth rate of comparable companies and companies in the field of preclinical comprehensive services
Risk tips
The price of raw materials has risen, the prosperity of innovative drugs has declined due to the impact of policies, the loss of core technicians, the rise of human costs, and the company’s management risks.
