\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 39 Apeloa Pharmaceutical Co.Ltd(000739) )
Event: on March 9, 2022, Apeloa Pharmaceutical Co.Ltd(000739) released the annual report of 2021: the company achieved an annual operating revenue of 8.943 billion yuan, a year-on-year increase of 13.49%; The net profit attributable to the parent company was 956 million yuan, a year-on-year increase of 17.00%; The net profit attributable to the parent company after deduction was 833 million yuan, with a year-on-year increase of 20.53%.
The annual performance was basically in line with expectations, and the growth rate of Q4 profit side slowed down slightly. The company’s annual profit in 2021 basically conforms to the company’s previous plan, and Q4 alone achieved an operating revenue of 2.543 billion yuan, a year-on-year increase of 19.86%; The net profit attributable to the parent company was 193 million yuan respectively, with a year-on-year increase of 3.7%, which decreased month on month, mainly because the profit brought by the price increase of Q4 products has not been fully reflected in the financial report. On the whole, the company’s performance in 2021 was mainly affected by the following factors: 1) under the influence of the global covid-19 epidemic, the sales revenue of antibiotic API products with high gross profit decreased; 2) The price rise of raw materials leads to the rise of product production cost; 3) The demand of veterinary drug business is weak due to the impact of pig price cycle; 4) The national energy dual control policy has affected the normal production of the company. However, we believe that with the gradual easing of the epidemic, the gradual improvement of policy restrictions, the gradual recovery of downstream antibiotic and veterinary drug business, the company adjusts the order price to transmit the upstream cost pressure to the downstream, and the company’s revenue side and profit side will be greatly improved in 2022.
The strong growth of cdmo business drives the rapid development of the company, and the project funnel structure is further formed. In terms of revenue structure, in 2021, the company achieved cdmo revenue of 1.394 billion yuan, a year-on-year increase of 32.09%, gross profit of 601 million yuan, a year-on-year increase of 36.85%, gross profit margin of 43.12%, a year-on-year increase of 1.50pct, cdmo business sector strategy has been strengthened, R & D capacity has been strengthened, the number of API cooperation projects has increased significantly, a year-on-year increase of 50%, of which 8 projects have achieved industrialized supply, Nine projects are in the verification stage, and 28 projects are in the R & D stage. Through multi field and multi project cooperation, the funnel structure of the project company was further formed. By the end of the reporting period, there were 812 cdmo quotation projects, with a year-on-year increase of 50%, and 323 ongoing projects, with a year-on-year increase of 62%. Among the ongoing projects, there were 143 projects in the R & D stage, with a year-on-year increase of 63%; Commercialization phase project 180.
The business of preparation and API sector grew steadily. The revenue of preparation business was 867 million yuan, a year-on-year increase of 14.11%, and the gross profit was 498 million yuan, a year-on-year increase of 13.71%. Although the API sector has increased costs due to the rising prices of some raw materials, energy and power, and the overseas epidemic has led to a decline in the export demand of antibiotic raw materials, it still achieved an income of 6.546 billion yuan, a year-on-year increase of 10.37%, a gross profit of 1.253 billion yuan and a gross profit margin of 19.15%. In conclusion, with the gradual improvement of internal and external adverse factors in 2022 and the rapid development of cdmo, the company has broad prospects for development in the future.
Investment suggestion: the company has an integrated platform of “API + Preparation” and a “one-stop” customized R & D and production service of pharmaceutical intermediates and APIs. At the same time, the demand and production capacity of the company’s main products are in the stage of rapid improvement, and there is a broad market space in the future. We estimate that the operating revenue from 2022 to 2024 will be 10.780 billion yuan, 12.902 billion yuan and 15.638 billion yuan respectively, and the net profit attributable to the parent company will be 1.274 billion yuan, 1.655 billion yuan and 2.065 billion yuan respectively, corresponding to 27, 21 and 17 times of PE respectively. It will be covered for the first time and given a “recommended” rating.
Risk warning: overseas export risk, and the promotion of cdmo business is less than expected risk.
