\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Key investment points:
Event: the company released the main business data from January to February 2022. From January to February, the year-on-year growth rate of orders on hand and sales revenue exceeded 65%. The company expects the year-on-year growth rate of revenue in the first quarter of 2022 to reach 65% – 68%, and the year-on-year growth rate of revenue in 2022 is expected to reach 65% – 70%.
Comments:
The company’s core business maintained high growth. The company implements the strategy of “following molecules”, integrates the chemical business (Wuxi Chemistry) sector, and continues to build an “integrated, end-to-end” crdmo (contract research, development and production organization) business, with strong order demand. It is estimated that the chemical business revenue will nearly double year-on-year in 2022, the testing business and biology business will continue the growth momentum in recent years, and the cell and gene therapy ctdmo business is expected to achieve growth faster than the industry. China’s new drug R & D service department will upgrade iteratively to meet customers’ higher requirements for China’s new drug R & D services, and the revenue is expected to decline to a certain extent.
The company will continue to improve its service capacity. The company will further strengthen its service capacity for new molecular types such as protac, oligonucleotide drugs, polypeptide drugs, antibody coupled drugs (ADC), double antibodies, cells and gene therapy, seize new business opportunities and enable global pharmaceutical innovation. In addition, by exploring cutting-edge technologies such as artificial intelligence, medical big data and automatic laboratory, the company strives to apply them to the new drug R & D process as soon as possible to help customers improve R & D efficiency and reduce the threshold of new drug R & D to the greatest extent.
Investment suggestion: the company is the world’s leading CXO enterprise, constantly optimizing and exploring cross platform business synergy, accelerating the pace of globalization, continuously strengthening the company’s unique integrated crdmo (contract research, development and production) business model, and providing real one-stop services to meet customers’ service needs from drug discovery, development to production. We expect the company’s earnings per share in 2021 / 2022 to be 1.72/2.75 yuan respectively, and the current share price corresponding to PE is 54 / 34 times respectively, maintaining the “recommended” rating of the company.
Risk tips: industry competition intensifies, R & D investment of upstream pharmaceutical enterprises decreases significantly, capacity expansion is less than expected, talent team construction is less than expected, drug R & D failure risk, loss of key customers, industry policy risk, etc.
