\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Key investment points
From January to February, the revenue accelerated year-on-year and the cost performance was prominent
The company announced: “from January to February 2022, the year-on-year growth rate of orders on hand and sales revenue exceeded 65%, reaching a record high. The company expects the year-on-year growth of revenue in the first quarter of 2022 to reach 65-68%. Looking forward to the whole year, the year-on-year growth of revenue is expected to reach 65-70%”.
Orders are booming and capital expenditure is still accelerating, supporting high performance growth. The company’s operating data continued to grow strongly, and the high growth of orders on hand guided the high growth trend of annual revenue in 2022. We believe that the company’s orders are still in a high growth stage, and its performance is highly sustainable under the condition of continuous acceleration of capital expenditure. The valuation is cost-effective and highly recommended. In 2022, the company’s PE was 32 times, which has been adjusted to a historical low, and its investment cost performance is more prominent. The company’s unique integrated crdmo and ctdmo business model is expected to continue to make efforts from 2022 to 2025 to lay the sustainability of high growth on the revenue side. It is suggested to focus on medium and long-term layout.
Profit forecast and valuation
We expect the company’s EPS to be 1.72, 2.94 and 3.44 yuan / share from 2021 to 2023. The closing price on March 9, 2022 corresponds to 32 times of PE in 2022 (27 times of PE in 2023). In a relatively undervalued position, maintain the “buy” rating.
Risk tips
Risk of declining prosperity of global innovative drug R & D investment; Risk of business decline due to unfavorable international expansion; Each competitive risk; Exchange risk; Uncertainty risk caused by fair value fluctuation.
