\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Event: on March 25, 2022, the company released the annual report for 2021 and the performance forecast for the first quarter of 2022. In 2021, the net profit attributable to the parent company was 524 million yuan, with a year-on-year increase of 61.49%; 2022q1 is expected to realize a net profit attributable to the parent company of RMB 326 million-344 million, with a year-on-year increase of 270% – 290%, and the performance of 2022q1 has a strong growth.
Major orders were delivered one after another, with strong performance growth in 2022q1:
In 2021, the company achieved a revenue of 3.105 billion yuan, a year-on-year increase of 49.87%; The net profit attributable to the parent company was 524 million yuan, a year-on-year increase of 61.49%; The net profit attributable to the parent company after non deduction was 503 million yuan, a year-on-year increase of 74.42%. Thanks to the rapid development of API cdmo business and the continuous optimization of the company’s profitability, the company’s performance achieved high growth in 2021.
2022q1 is expected to achieve a revenue of 1.357 billion yuan – 1.466 billion yuan, with a year-on-year increase of 150% – 170%; The net profit attributable to the parent company is expected to be RMB 326 million to RMB 344 million, with a year-on-year increase of 270% – 290%. 2022q1’s performance continued to grow strongly, mainly due to the smooth delivery of major orders.
Major orders continued to land, and the company’s on hand orders grew strongly:
The funnel effect of the company’s project pipeline is obvious. According to the company’s announcement, by the end of 2021, the number of service projects in preclinical / clinical phase I, clinical phase II, clinical phase III, new drug listing application stage and listing stage is 209, 65, 44, 10 and 87 respectively. Among them, in terms of major orders, the company landed major orders of US $217 million and US $681 million in November 2021 and February 2022 respectively, with strong growth in orders on hand.
The continuous and rapid release of cdmo capacity of API effectively ensures the on-time delivery of orders:
The company has three cdmo production bases of API: Changshou in Chongqing, Yichun in Jiangxi and Yingcheng in Hubei. According to the company’s announcement, after the newly put into operation of workshop 109 of Changshou production base and the acquisition of the capacity of Hubei Yuyang pharmaceutical industry in 2021, the company’s API cdmo capacity will be expanded to 2019m3, with a capacity increase of 65%. In 2022, the transformation of Hubei Yuyang Pharmaceutical Workshop will be completed successively, and its production capacity is expected to be released continuously, effectively ensuring the timely delivery of orders.
Tracking from the leading indicators, the company is in the rapid release period of production capacity in the current period. From the analysis of short-term indicators, the number of employees of the company reached 3782 in 2021, with a year-on-year increase of 43.53%, further accelerating the growth compared with 2020; From the analysis of medium and long-term indicators, the fixed assets and construction in progress in 2021 were 1.748 billion yuan and 342 million yuan respectively, with a year-on-year increase of 28.26% and 80.73% respectively.
The cdmo business of preparation and gene cell therapy is booming, which fully accumulates strength for the medium and long-term development of the company:
In the field of gene cell therapy cdmo, the company provides services around AAV virus packaging, car-t cell ind production, car-nk project toxicology batch and registration batch production, plasmid process development, engineering batch and GMP production, til cell ind declaration, live bacteria project, etc. In terms of orders, according to the company’s announcement, in 2021, the company introduced 27 new projects and signed new orders of about 130 million yuan; In terms of production capacity, the laboratory on the fourth floor of the gene cell therapy service platform project located in Sangtian Island, Suzhou has been put into operation to further strengthen the company’s ability in gene therapy process development, analysis and testing.
In the field of preparation cdmo, according to the company’s announcement, in 2021, the company introduced 31 new projects and signed 71.33 million yuan of new orders. The phase I project of preparation production base located in Liangjiang New Area of Chongqing was started and is expected to be put into operation gradually in 2022q4. The cdmo capacity circle of the company’s preparations has been gradually expanded, and the company has the preparation production capacity from R & D, pilot test, clinical sample preparation and small-scale commercialization.
Investment suggestion: we expect the company to realize net profits of 1.266 billion yuan, 1.45 billion yuan and 1.856 billion yuan respectively from 2022 to 2024, with a year-on-year increase of 141.6%, 14.6% and 28.0% respectively; Give an investment rating of buy-a.
Risk tips: the order growth is less than expected, the production capacity of cdmo of API is less than expected, the order price of API is lower, and the progress of cdmo of biological drugs and preparations is less than expected
