\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Key investment points
Event: acquisition of small molecule capacity, corresponding to ps1.1 in 2020 seventy-one
On March 9, 2022, Porton Pharma Solutions Ltd(300363) announced that it planned to acquire 100% equity of Kaihui pharmaceutical under Ruizhi chemical for RMB 266 million, corresponding to about 1.71 times of the target revenue PS in 2020, which was used to supplement the development needs of the company’s small molecule business.
Subject matter: old brand cro with good customer base and delivery experience
Kaihui pharmaceutical was founded in 2009, covering an area of 644795m2. It has the production capacity of early clinical and 100 kg GMP intermediates, APIs and preparations. It is one of the earliest enterprises engaged in small molecule drug R & D and production services in China, and has a good customer base and project delivery experience.
Short term impact: short-term transformation or loss, which is expected to be put into operation in 2023
Kaihui Pharmaceutical Co., Ltd. was convicted of the crime of polluting the environment in March 2021 and has been shut down so far. The company is currently in a state of loss. The acquisition of Porton Pharma Solutions Ltd(300363) is expected to upgrade and integrate Kaihui Pharmaceutical Co., Ltd. in terms of enterprise operation, personnel arrangement, company system and other aspects. We expect it may take 3-6 months or put into operation in 2023.
Long term impact: linkage with Shanghai laboratory to accelerate the layout of small molecule production capacity
The change of the company’s capacity acquisition strategy in 2022 is of great significance to the company’s long-term development.
(1) clearer functional division of production capacity and undertaking more cro projects will help to improve the switching efficiency of the company’s projects from R & D to production and improve the turnover rate of original production capacity such as Changshou plant;
(2) form linkage with the expanding Shanghai R & D center to undertake new small molecule projects and supplement the capacity of API and preparation;
(3) undertake the original Chinese customer projects of the supplementary target company and strengthen the layout in China; We believe that the significance of large orders in 2022 is not only to increase the volume of the company and enhance the cooperative relationship with key customers, but also to recommend investors to pay attention to the landing of new production capacity of new boten under large orders and accelerate the layout of the whole industrial chain with abundant cash flow.
Profit forecast and valuation
Regardless of the impact of the acquisition, we expect that the company’s EPS from 2021 to 2023 will be 0.97, 2.25 and 3.26 yuan / share, corresponding to the closing price on March 9, 2022, and the PE in 2022 will be 36 times, 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.
