\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Key investment points:
Event: the company issued the annual report of 2021. In 2021, the company achieved a revenue of 22.902 billion yuan, a year-on-year increase of + 38.50%; The net profit attributable to the parent company was 5.097 billion yuan, a year-on-year increase of + 72.19%; The net profit deducted from non parent company was 4.064 billion yuan, a year-on-year increase of + 70.38%. The company's performance growth is in line with expectations.
Chemical business: the contribution of new businesses such as oligonucleotide and polypeptide drugs and preparation cdmo is incremental. It is expected that the revenue of chemical business will increase by about 94.00% year-on-year in 2022. In 2021, the company's chemical business revenue was 14.087 billion yuan, a year-on-year increase of + 46.93%; The gross profit margin was 39.51%, a year-on-year decrease of 1.68pct, mainly affected by the depreciation of the US dollar and the rise in the price of raw materials. In terms of further business segmentation, during the reporting period, the small molecule drug discovery (R) business completed the synthesis of 310000 new compounds, realizing a revenue of 6.147 billion yuan, a year-on-year increase of + 43.24%, of which the revenue from long tail customers increased by + 71%. The service revenue of process R & D and production (D & M) was 7.92 billion yuan, a year-on-year increase of + 49.94%. D & M service projects involved 1666 new drug molecules, including 42 approved for listing, 49 in clinical phase III, 257 in clinical phase II, 1318 in clinical phase I and preclinical stages, and 14 newly commercialized projects (year-on-year + 50.00%). In terms of new business development, the D & M service of oligonucleotide and polypeptide drugs achieved a revenue of US $115 million, a year-on-year increase of + 145%, and the number of customers and molecules increased by + 128% and + 154% year-on-year. In addition, one or two preparation projects of the company have passed the pre-market inspection of the US FDA and China nmpa respectively. By the end of 2021, the company had 4 preparation commercial production projects, and another 8 preparation projects were in clinical phase III or NDA application stage. Based on the assumptions of orders in hand and stable internal and external environment, the company expects the chemical business revenue to increase by about 94.00% year-on-year in 2022.
Testing business: the revenue in 2021 was + 38.03% year-on-year, and toxicology, clinical cro and SMO services grew rapidly. In 2021, the company's testing business realized a revenue of 4.525 billion yuan, a year-on-year increase of + 38.03%; The gross profit margin increased by 0.09pct to 31.70% year-on-year. In terms of further business segmentation, driven by toxicology business and business related to new molecular types of DMPK, the company's laboratory analysis and testing services realized a revenue of 3.045 billion yuan, a year-on-year increase of + 38.93%; Wind platform signed 149 service projects, a year-on-year increase of + 49%. The revenue of clinical cro and SMO business was 1.48 billion yuan, a year-on-year increase of + 36.20%. During the reporting period, the company provided clinical trial development services for 240 projects and helped customers complete 19 clinical research applications and 12 listing applications. Smo services enabled 25 innovative drugs to be approved for listing, an increase of 8 compared with 2020. The company expects that the revenue growth of the test business segment in 2022 will continue the momentum of recent years.
Biology business: the income of oligonucleotides and other new molecular types and biological drugs increased significantly. In 2021, the company's biological business realized a revenue of 1.985 billion yuan, a year-on-year increase of + 30.05%; The gross profit margin decreased by 2.99pct to 38.73% year-on-year, mainly due to the rise in the price of raw materials and the exemption of social security expenses in the same period last year. During the reporting period, with the launch of oncowuxi database 2.0 and the launch of wuxiiofoundation products, the company achieved strong growth in tumor new drug discovery services, rare diseases and immunological diseases. In addition, the company focused on building the biological capacity of new molecular types such as oligonucleotides, cancer vaccines, protac, virus vectors and innovative drug delivery systems. The revenue related to new molecular types and biological drugs increased by 75% year-on-year, and the proportion in the biological business revenue increased by 4.20pct to 14.60% year-on-year. The company expects that the revenue growth of biology business segment in 2022 will continue the momentum in recent years.
Cell and gene therapy ctdmo business: 2022 is expected to usher in a turning point. In 2021, the company's ctdmo business of cell and gene therapy realized a revenue of 1.026 billion yuan, a year-on-year increase of - 2.79%; The gross profit margin decreased by 16.06pct to - 2.03% year-on-year, which was mainly affected by the delay of product listing declaration of American customers and covid-19 epidemic. Among them, the business revenue of cell and gene therapy ctdmo in China increased by 87% year-on-year. During the reporting period, the number of ctdmo service projects of cell and gene therapy of the company was 74, including 58 preclinical and phase I clinical trial projects, 5 phase II clinical trial projects and 11 phase III clinical trial projects. In addition, Shanghai Lingang Holdings Co.Ltd(600848) , Philadelphia R & D and production bases were officially put into operation in October and November 2021 respectively. In 2022, the company's cell and gene therapy ctdmo business development will usher in a turning point, and the growth of related revenue will exceed the growth rate of the industry.
China's new drug R & D services: affected by the improvement of R & D requirements, the revenue growth is expected to be under pressure in 2022. In 2021, the company's China new drug R & D Service Department achieved a revenue of 1.251 billion yuan, a year-on-year increase of + 17.47%; The main reason is that the cost of social security outsourcing increased to 11pct.3% year-on-year, and the gross profit rate decreased to 11pct.3% year-on-year. During the reporting period, the company completed 26 ind applications for customers and obtained 23 clinical trial approvals. By the end of 2021, the company had completed the ind application of 144 projects and obtained the clinical trial approval of 110 projects. Among them, one project is in the stage of listing application (NDA), three projects are in phase III clinical trial, 14 projects are in phase II clinical trial and 74 projects are in phase I clinical trial. Among the 144 projects that have submitted clinical applications or are in the clinical stage, about 70% of the projects rank among the top three similar drug candidates in China. After the successful listing of customer products, the company will receive a sales commission, which is expected to contribute to the company's performance. Looking forward to 2022, affected by the increased requirements for new drug R & D services, the revenue of the company's China new drug R & D service department is expected to decline to a certain extent.
Profit forecast and investment suggestions: the company firmly implements the "follow the molecules" strategy, the project funnel effect and business synergy effect appear, the stock business and emerging business maintain a good development trend, and the company's performance is expected to continue to maintain high-speed growth. From 2022 to 2024, the company is expected to realize a return to parent profit of 86.40/93.15/11.632 billion yuan, EPS of 2.92/3.15/3.94 yuan respectively, and the PE corresponding to the current stock price is 37.76/35.02/28.05 times respectively. Considering: (1) the compound growth rate of the company's performance is expected to reach 30% - 35% in the next three years; (2) The PE of peer companies Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) in 2022 were 44.59 and 49.21 times respectively; Give the company 45-50 times PE in 2022, and the corresponding target price is 131.40-146.00 yuan / share, maintaining the company's "recommended" rating.
Risk tips: covid-19 epidemic risk, increased industry competition risk, exchange rate change risk, Sino US trade friction risk, order growth less than expected risk, etc.
