\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
The company issued the 2021 annual report. In 2021, the operating revenue was 22.9 billion yuan, a year-on-year increase of 38.5%; The net profit attributable to the parent company was 5.097 billion yuan, a year-on-year increase of 72.2%; The net profit after non deduction from the parent company was 4.064 billion yuan, a year-on-year increase of 70.4%; After adjustment, the net profit attributable to the parent company of non IFRS was 5.131 billion yuan, a year-on-year increase of 41.1%.
The performance is in line with expectations, and the main business continues to grow strongly. 1) In 2021, the main business grew strongly, among which the revenue in 2021q4 increased by about 35.1% year-on-year and 6.6% month on month, maintaining the quarter on quarter growth; Under the strong order demand, the main business, especially the chemical sector, grew strongly. 2) The company has continuously optimized its operating efficiency, continuously improved its capacity utilization, and continuously reflected the scale effect. The growth rate of net profit attributable to parent company and adjusted non IFRS net profit attributable to parent company has exceeded the income growth level. 3) In 2021, the gross profit margin of the main business was 36.27%, down 1.7 percentage points year-on-year, which was mainly affected by the sharp depreciation of the US dollar against the RMB, the rise in the price of raw materials and the exemption of social security expenses during the epidemic period in China last year. 4) We are optimistic that the company’s unique integrated crdmo and ctdmo business model will continue to develop, with high growth in 2022 and strong certainty. According to the recent announcement, the year-on-year growth rate of orders and sales revenue of the company from January to February 2022 exceeded 65%, reaching a record high. It is expected that the year-on-year growth of annual revenue is expected to reach 65-70%.
1) chemical business: in 2021, the revenue was about 14.09 billion yuan (year-on-year + 46.9%), of which the revenue of small molecule drug discovery, process R & D and production services was 6.17 billion yuan (year-on-year + 43.2%) and 7.92 billion yuan (year-on-year + 49.9%). After the integration of chemical business, we will continue to build an “integrated, end-to-end” crdmo business. The strong demand for orders will accelerate the revenue growth of the sector. The company expects the revenue growth of the chemical business sector in 2022 to nearly double that of 2021.
2) testing business: in 2021, the revenue was about 4.525 billion yuan (year-on-year + 38.0%), of which the revenue of laboratory analysis and testing services, clinical cro and SMO services was 3.05 billion yuan (year-on-year + 38.9%) and 1.48 billion yuan (year-on-year + 36.2%). Drug analysis and testing services excluding device testing achieved a year-on-year increase of about 52.1%. The company expects that the revenue of test business in 2022 will continue the rapid growth momentum in recent years.
3) biology business: in 2021, the revenue will be about 1.985 billion yuan (year-on-year + 30.1%). The company expects that the sector revenue in 2022 will continue the rapid growth momentum in recent years.
4) Wuxi ATU: in 2021, the revenue was about 1.026 billion yuan (year-on-year – 2.79%), of which ctdmo of cell and gene therapy in China grew rapidly, and the revenue increased by about 87% year-on-year, which partially alleviated the impact of delayed submission of listing applications by some customers and covid-19 epidemic in the United States. The company expects that the sector business will accelerate in 2022, and the revenue growth is expected to exceed the industry growth.
5) Wuxi ddsu: in 2021, the revenue will be about 1.251 billion yuan (year-on-year + 17.47%). In 2022, it will be upgraded iteratively to meet customers’ higher requirements for new drug R & D services in China.
Profit forecast and rating: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 8.36 billion yuan, 10.55 billion yuan and 13.83 billion yuan respectively, with a year-on-year increase of 64.1%, 26.1% and 31.0%; The corresponding PE is 39x, 31x and 24x respectively. We are optimistic that the company, as the leader of new drug R & D and production outsourcing services, will continue to grow and maintain the “buy” rating.
Risk tips: the epidemic affects the operational risk, the risk that the order execution is less than expected, the risk of declining demand for pharmaceutical research and development, the risk of aggravating international trade disputes, and the risk of exchange rate changes.
