\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Key investment points
Driven by the superposition of products and technologies, the turnover rate of fixed assets increased by 130% in five years
As a cdmo business driven by fixed assets, we believe that: performance = capacity unit output. For Porton Pharma Solutions Ltd(300363) as for 20172021, the CAGR of fixed assets is 3.7%, corresponding to the CAGR of income of 27%. The growth of available performance is mainly driven by the improvement of the turnover rate of fixed assets. By analyzing the company's capacity revenue composition and comparing the turnover rate of fixed assets in Asymchem Laboratories (Tianjin) Co.Ltd(002821) recent 5 years, we believe that:
① Porton Pharma Solutions Ltd(300363) from 2017 to 2021, the growth of revenue volume mainly comes from the improvement of turnover rate of fixed assets;
② based on the analysis of capacity utilization and the turnover rate of fixed assets of comparable companies, we believe that there is still room for improvement in the unit output of the company;
③ with the gradual fulfillment of large orders in 2022, the turnover rate of fixed assets is expected to increase more than expected. The improvement of unit yield is the main driver of performance in the past five years. Behind the increase in the turnover rate of fixed assets is the double increase in revenue and profitability brought about by the improvement of order structure. Porton Pharma Solutions Ltd(300363) since 2017, the product and customer structure have been continuously improved, and the API business analysis with better competition pattern shows that the proportion of API revenue has increased from 4.53% in 2017 to 11.00% in 2021q1-q3, The proportion of the top 10 products decreased from 58.09% in 2017 to 38% in 2021q1-q3. We believe that this is the underlying logic that leads to the improvement of the company's fixed asset turnover rate. Corresponding to the analysis of the income and profit changes of Jiangxi Boteng and Changshou, we believe that the improvement of order structure has led to the improvement of the turnover rate of fixed assets, which is further reflected in the double improvement of income and profitability.
Technology upgrading and efficiency improvement. In addition to the changes in product structure, we believe that the application and upgrading of the company's continuously invested technology platform has also brought a positive impetus to the improvement of the company's fixed asset turnover. Since 2020, the company's four in one technology platform construction of "crystallization + enzyme catalysis + fluid + high activity" has realized the closed loop of production, learning and research. The application of new technology has long-term significance in improving efficiency, increasing yield and saving cost. We believe that the increase of production capacity is not the only indicator to measure the growth of the company's revenue volume. The change of product structure has a significant impact on the improvement of unit output value of production capacity. The improvement of the company's technical ability and management ability is expected to further boost the improvement of the turnover rate of fixed assets. For companies in the standard industry ( Asymchem Laboratories (Tianjin) Co.Ltd(002821) fixed assets turnover rate 2.2-2.3 times), We believe that the output value of the company's original production capacity still has some room for improvement.
Production capacity: double or double in the next 2 years to support the continuous improvement of the ceiling
At the same time, we can see that under the sustained high boom of small molecule cdmo and the support of large orders, the company has also entered the stage of capacity accelerated construction. According to the company's third quarterly report in 2021, the company has fixed assets of 1.709 billion and small molecule cdmo production capacity of 2000m3. At present, the capacity to be built or under construction includes: ① laboratory capacity: Shanghai R & D Center (estimated investment of 180 million); ② small molecule cdmo: Changshou 301 workshop (estimated investment of 260 million) and Jiangxi DONGBANG phase II (estimated investment of 420 million); ③ New business: Construction of preparation (21900 m2 in Chongqing) and biological cdmo production capacity (estimated investment of 400 million); (4) Upgrading of overseas production capacity. According to the company's announcement and statistics, the small molecule capacity will be invested at least 680 million in 20222023, with a corresponding capacity of 443 m3. If considering that the remaining 200 mu of Yuyang in Hubei Province acquired may be transformed and put into operation successively in 20222023, only considering the endogenous capital expenditure, we estimate that the small molecule cdmo or capital expenditure of the company will be about 1 billion in 20222023, with a capacity increase of about 60-70%; Total business capital expenditure is about 1.6 billion, close to the fixed asset increment doubled in 2021.
We believe that with the gradual increase of new business, the company's technical platform will be gradually improved from 2022 to 2023, and the turnover rate of fixed assets is expected to be further improved under the background of high value-added and large orders. From 2022 to 2023, the company's production capacity will be gradually put into operation, providing a driving force for the company's medium and long-term rapid development.
Profit forecast and valuation
Considering the delivery cycle of the company's orders, the increase of new fixed assets and the turnover rate of fixed assets from 2022 to 2023, we expect the company's EPS to be 0.97, 2.25 and 3.26 yuan / share from 2021 to 2023, corresponding to the closing price on March 4, 2022, and the PE to be 38 times in 2022, maintaining the "buy" rating.
Risk tips
The volatility of the impact of depreciation of new fixed assets, equity incentive and exchange on apparent performance; Volatility of profit cycle of new business; The prosperity of investment and financing of innovative drugs has declined.
