\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Summary of this issue:
Event:
The company issued the annual report of 2021 and the pre increase announcement in the first quarter of 2022. In 2021, the company achieved an annual operating revenue of 3.105 billion, a year-on-year increase of 49.87%; The net profit attributable to the parent company was 524 million, with a year-on-year increase of 61.49%; The net profit deducted from non parent company was 503 million, with a year-on-year increase of 74.42%; The company’s annual net operating cash flow was 480 million yuan, a year-on-year decrease of 4.80%. The company estimates that the operating revenue of Q1 in 2022 will be 1.357-1.466 billion yuan (median 1.361 billion yuan), with a year-on-year increase of 150170%; The net profit attributable to the parent company was RMB 326344 million (median value: RMB 335 million), with a year-on-year increase of 270290%; The net profit of non parent company was 33.0-3.3 billion yuan, a year-on-year increase of 3.9-2.43 billion yuan.
Comments:
The driving effect of large orders began to show, and the performance of 2021q4 and 2022q1 accelerated. According to calculation, Q4 achieved an operating revenue of 1.08 billion yuan in 2021, a year-on-year increase of + 84.2%; The net profit attributable to the parent company was 160 million yuan, a year-on-year increase of + 91.1%. We believe that the increase in performance is related to Pfizer’s large orders. It is expected that with the digestion of orders, the company’s performance will continue to show an upward trend in 2022.
The net interest rate rises and the scale effect reduces the expense rate. In 2021, the company’s comprehensive gross profit margin was 41.4%, the net profit attributable to the parent was 16.9% (year-on-year + 1.24 PPS), and the net profit deducted from non attributable to the parent was 16.2% (year-on-year + 2.29 PPS). During 2021, the expense rate was 20.89% (year-on-year -3.47 PPS), including 9.33% (year-on-year -1.62 PPS), 8.50% (year-on-year + 0.88 PPS), 3.12% (year-on-year -0.58 PPS) and – 0.06% (year-on-year -2.14 PPS). The scale effect should significantly reduce the expense rate during the period of the company, covering the increase of personnel salary, equity incentive, raw materials and other expenses.
The inflection point is approaching: the cdmo of API has been successfully transformed, and the cdmo of preparation and CGT has entered a new stage. The cdmo business of API achieved a revenue of 3.069 billion yuan in 2021, with a year-on-year increase of 51%, of which API achieved a revenue of 290 million yuan, with a year-on-year increase of 55%. The effect of transformation and upgrading is remarkable; 76 new customers were introduced; There are a total of 410 projects (excluding J-star), including 209 preclinical and phase I, 65 phase II, 44 phase III, 10 ind stages and 87 NDA stages, and a total of 20 diversion projects. The pipeline diversion effect is beginning to show. Cdmo of preparations achieved a revenue of 2016 million yuan; 23 new customers and 31 new projects were introduced, and 71.13 million yuan of new orders were signed; The end-to-end chain was gradually opened up, and 13 ds-dp collaborative projects were realized. CGT cdmo achieved a revenue of 13.87 million yuan, an increase of 897% year-on-year; 15 new customers, 27 new projects and 130 million yuan of new orders were introduced, covering viruses, plasmids, cells, live bacteria and other products.
Focus on R & D, improve production capacity, continuously enhance comprehensive strength, and build a multi domain comprehensive cdmo platform. At present, the company has eight R & D centers in Chongqing, Shanghai, Chengdu, Suzhou and New Jersey, with 1201 R & D technicians. Its business covers three sectors: API, preparation and cgtcdmo, and actively opens up the whole process service of each sector. In terms of production capacity, the company currently has a production capacity of 2019m3, with a year-on-year increase of about 65%. In 2022, Yuyang production capacity will be gradually released to supplement the raw material cdmo production capacity; The company expects to increase capital expenditure to 1.7 billion yuan in 2022, and invest in the capacity construction of three sectors and J-star respectively to meet the rapidly growing market demand.
Profit forecast: Based on the company’s large orders and the gradual release of production capacity, we raised our profit forecast for the company. It is estimated that the company’s operating revenue from 2022 to 2024 will be 7.743 billion yuan, 8.034 billion yuan and 10.670 billion yuan, with a year-on-year increase of 149.4%, 3.8% and 32.8%; The net profit attributable to the parent company was 1.647 billion yuan, 1.521 billion yuan and 2.005 billion yuan respectively, with a year-on-year increase of 214.3%, – 7.7% and 31.9%, corresponding to 31 / 34 / 25 times of PE from 2022 to 2024.
Risk factors: increased competition in the industry, decline in R & D investment and outsourcing demand in the pharmaceutical industry, China’s international policies, loss of core technicians and other risks.
