\u3000\u3 Guocheng Mining Co.Ltd(000688) 202 Shanghai Medicilon Inc(688202) )
In the short and medium term, there will be high growth in certainty: the number of newly signed orders & employees will grow rapidly, and the production capacity will be accelerated, adding to the high growth in performance in the next three years.
The company was founded in 2004. In recent years, through the participation of core executives (such as Dr. Dai Xuedong, executive vice president of international R & D business department), and through high-intensity R & D investment, the company has continuously improved its preclinical integrated service ability and expanded its core competitiveness. In the short and medium term, benefiting from the high domestic demand brought by the prosperity of China’s innovative drug research and development and the performance increment brought by the continuous expansion of overseas markets, the company achieved ultra-high growth in new orders (new orders signed in 2021 were 2.452 billion yuan, a year-on-year increase of 87.6%), In addition, from the perspective of the number of employees and laboratory capacity (IPO raised investment Nanhui project put into operation and proposed additional projects in 2022, etc.), continue to strengthen the supply side capacity and increase the certainty of high performance growth in the next three years.
In the medium and long term, there is huge room for growth: Based on China and looking forward to the world, it is expected to become one of the world’s leading preclinical cros.
Following the development paths of Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) and so on, judging from the current business structure and revenue scale, Shanghai Medicilon Inc(688202) is similar to Wuxi Apptec Co.Ltd(603259) in 20062008 and Pharmaron Beijing Co.Ltd(300759) in 20142016. In the medium and long term, as a scarce target of China’s preclinical integration, the company will continue to benefit from the high vision brought by the prosperity of China’s innovative drugs and the transfer of the global innovative drug industry chain based on the bonus of engineers. It will continue to cultivate the integrated service ability of drug discovery + CMC + preclinical research, and is expected to become the leader of global preclinical integration service with huge growth space.
The implementation of normalized equity incentive will continue to add certainty to the company.
On the basis of the restricted stock incentive plan in 2020, the company further carried out further equity incentive plans for core technical employees (Peng Shuangqing, Xu Yongmei, Li Zhigang) and another 357 core employees in 2021, so as to realize the normalization of equity incentive for core employees and the consistency of the interests of core employees with the company and shareholders. The 2021 restricted stock incentive plan will further improve the performance unlocking conditions on the basis of equity incentive in 2020, that is, the compound growth of operating revenue or net profit attributable to parent company from 2021 to 2023 will not be less than 60% and 70%, maintain ultra-high growth and further enhance the certainty of future performance growth.
Investment advice
As a scarce target of preclinical integration in China, looking forward to the next 5-10 years, the company will continue to cultivate drug discovery + CMC + preclinical research business, continue to benefit from the high prospect of the Chinese market, the continuous expansion of overseas markets and the continuous landing of CMC business, and is expected to become one of the leaders of preclinical cro in China looking forward to the world. Considering the strong and rapid growth of drug discovery and preclinical research business orders and operating revenue, the early profit forecast is slightly adjusted, that is, the operating revenue is expected to be adjusted from RMB 1.185/2.014/3.021 billion to RMB 1.167/19.83/2.975 billion and EPS from RMB 4.59/7.88/11.93 to RMB 4.54/7.79/11.78 respectively from 2021 to 2023, Corresponding to the closing price of 396 yuan / share on March 4, 2022, PE is 87.27/50.86/33.61 times respectively, maintaining the “buy” rating.
Risk tips
The company’s order demand is lower than expected, the investment in the investment projects is lower than expected, the loss of core technical backbone and management, the risk of intensified competition, and the impact of New Coronavirus epidemic.
