\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event overview
From January to February 2022, the company’s on hand orders and sales revenue increased by more than 65% year-on-year, reaching a record high. The company expects revenue to grow 65-68% year-on-year in the first quarter of 2022. Looking forward to the whole year, the company’s revenue is expected to increase by 65-70% year-on-year.
Analysis and judgment:
In the first two months of 22 years, the performance showed ultra-high growth, which verified the advantages of the company’s integrated crdmo service
The company announced that the year-on-year growth rate of orders on hand and sales revenue from January to February exceeded 65%, and the growth rate of Q1 revenue is expected to be 65% ~ 68%, which is consistent with the annual guidelines of the previous 2021 annual performance express, highlighting the company’s unique advantages of integrated crdmo (contract research, development and production) and ctdmo (contract detection, R & D and production) business models. Considering China’s bottom dividend (Engineer bonus and production cost advantage) and the current low proportion of China’s CXO supply chain in the world, we still maintain the previous judgment that the CXO industry will continue to grow rapidly in the next 3-5 years, among which Wuxi Apptec Co.Ltd(603259) is a global CXO leading enterprise rooted in China, It will continue to benefit from the high growth brought by the industry dividend. Considering the ultra-high growth of performance since the beginning of the year and the advantages of the company’s integrated service, looking forward to the future, as the world’s leading integrated service leader of “drug discovery + preclinical research + clinical business and cdmo business”, the company will continue to benefit from the high outlook of the industry and continue to show high growth.
As a “big and strong” platform innovative drug service provider, it is expected that the performance will continue to grow at a high speed in the next 5 ~ 10 years
Since its establishment in 2000, the company has continuously expanded its business scope and prospectively diversified its business layout. At present, it has become a global “big and strong” platform service provider. Looking forward to the next five years, even more than 10 years, the company’s core competitive advantage is the business scalability brought by platform enterprises, that is, the ability to expand industrial chain business in the future is the core concern to ensure long-term growth. Based on the two core businesses (laboratory business + cdmo business), the company actively distributes the cdmo field of cell and gene therapy, the innovative business ddsu, and the clinical cro field. It is expected that the performance will continue to grow at a high speed in the next 5 ~ 10 years.
Investment advice
As a “big and strong” platform innovative drug service provider, the company has global business competitiveness, and the management team with Li Ge as the leadership core has the foresight of business layout and the ability to expand business. We judge that the company is a rare target with medium and long-term growth of a shares. Considering the changes of investment income and fair value and the strong and rapid growth of core business, the early profit forecast was raised, that is, the revenue from 21-23 years was raised from 22.854/30.517/40.943 billion yuan to 22.902/38.482/48.485 billion yuan, and EPS was reduced from 2.06/2.86/3.65 yuan to 1.72/2.80/3.48 yuan in consideration of the conversion of share capital and other factors in 21 years, Corresponding to the closing price of 93.80 yuan / share on March 9, 2022, PE was 54.39/33.51/26.93 times respectively, maintaining the “buy” rating.
Risk tips
The core technology backbone and management risk of loss, the risk of increased competition, growth strategy and business expansion risk of failure, core customer loss, exchange rate volatility risk, drug price reduction in the US market, and New Coronavirus epidemic affect the expansion of China’s external business.
