\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event: the company released the annual report of 2021, and achieved a revenue of 22.902 billion yuan (+ 38.5%, the year-on-year growth rate in brackets, the same below); The net profit attributable to the parent company was 5.097 billion yuan (+ 72.19%); Deduct the net profit not attributable to the parent company of RMB 4.064 billion (+ 70.38%); Operating cash flow was 4.589 billion yuan (+ 15.49%); The adjusted non IFRS net profit attributable to the parent company of core performance indicators was 5.131 billion yuan (+ 41.08%).
All business segments maintained steady growth, and new businesses accelerated. Quarter by quarter, the company’s revenue in Q4 of 2021 was 6.381 billion yuan (+ 35.2%), and the adjusted non IFRS net profit attributable to the parent company was 1.32 billion yuan (+ 21.4%), which slightly exceeded the market expectation. In terms of business, the company’s chemical business achieved a revenue of 14.087 billion yuan (+ 46.93%, including small molecule drug discovery + 43.24%, process R & D and production + 49.94%) in 2021. Considering covid-19 orders, the growth rate in 2022 is expected to double compared with that in 2021; The test business achieved a revenue of 4.525 billion yuan (+ 38.03%); Biology business achieved a revenue of 1.985 billion yuan (+ 30.05%); Ctdmo business of cell and gene therapy achieved a revenue of 1.026 billion yuan (- 2.79%), with a year-on-year increase of 87% in China; China’s new drug R & D Service Department achieved a revenue of 1.251 billion yuan (+ 17.47%). The main performance drivers of the company come from the chemical business and the rapidly growing testing business. The company continues to build an “integrated, end-to-end” crdmo business, with strong order demand. In 2021, there were more than 1660 new customers and more than 5700 active customers. The retention rate of the top ten customers was 100%, and the income of old customers accounted for 93%. The long tail effect of customers was obvious.
New businesses continue to achieve breakthroughs and help the company develop at a high speed in the future. In terms of chemical business, 732 molecules were added to the crdmo pipeline in 2021, with a total of 1666 molecules throughout the year, including 42 commercialized, 49 in phase III, and 99 oligonucleotide and polypeptide drug projects; In terms of testing business, by the end of 2021, the company has 110000 square meters of laboratories, which is expected to increase to 165000 square meters in 2023, and the number of animal houses is expected to increase from 450 in 2021 to 750 in 2023; The synergy between biological business and chemical business is significant, and the proportion of customers using wuxichemistry and wuxibiology at the same time is more than 70%; In terms of cell gene therapy, there are 53 preclinical and phase I projects, 8 phase II projects and 11 phase III projects in 2021. Four projects are about to submit listing applications. It is expected to usher in commercial cgtcdmo projects from 2022 to 2023, contributing performance flexibility to the company; There are 232 projects in progress in ddsu business, of which one project is in NDA stage and three projects are in clinical phase III. The company’s performance blossoms at many points. In the future, it is expected to continue to lead the industry in emerging businesses and lay a solid foundation for high performance growth.
Epitaxial acquisition + capacity construction has been continuously promoted, and the capacity has been released stably and continuously. In 2021, the company completed the production of Changzhou phase II, Taixing, Wuxi oral and sterile filling preparation plants, completed the construction of Changshu plant, and accelerated the construction of Changzhou phase III, Taixing phase I, Delaware and other facilities. On August 3, 2021, the company completed the acquisition of Bristol Myers Squibb’s preparation production base in kuwei, Switzerland, and began to consolidate in July, becoming the first production base in Europe; On September 24, 2021, the land acquisition in Delaware was completed to reserve capacity expansion. Under the condition of high capital expenditure + epitaxial acquisition, the company’s production capacity expanded significantly, providing sufficient momentum for future performance growth.
Profit forecast and investment rating: considering the large orders of covid-19 and the rapid volume of new business, we maintain the forecast of net profit attributable to parent company of RMB 8.633 billion and RMB 10.406 billion from 2022 to 2023, and the forecast of net profit attributable to parent company of RMB 13.221 billion in 2024; The current market value corresponds to 38 / 31 / 25 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk warning: capacity expansion is less than expected, exchange profit and loss risk, etc.
