\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event: the company released its annual report for 2021, and achieved an operating revenue of 22.9 billion yuan in 2021, with a year-on-year increase of 38.5%; The net profit attributable to the parent company was 5.01 billion yuan, a year-on-year increase of 72.2%; Deduct non net profit of 4.06 billion yuan, an increase of 70.4% year-on-year.
Comments:
Relying on crdom / ctdmo business model, the company’s performance continued to grow strongly to make up for the slight decline in gross profit margin. The company’s annual operating revenue increased by 38.5% year-on-year, and the revenue and growth rate were the highest since the company was listed; The gross profit margin was 36.3%, a year-on-year decrease of 1.7pct, mainly due to the impact of exchange rate and the increase in talent retention and investment for high performance growth in 2022. The integrated enabling platform continues to bring output results: in 2021, the revenue contributed by the original customers was 21.295 billion yuan, a year-on-year increase of 29%, accounting for 93.0% of the company’s annual revenue; At the same time, the company continued to adhere to the “long tail customer” strategy, the retention rate of the top ten customers was 100%, and the penetration rate of large pharmaceutical enterprises was improved. The customers of the top 20 pharmaceutical enterprises in the world contributed 6.73 billion yuan (+ 24%), accounting for 29.4%. The company’s performance at home and abroad grew strongly, with a growth rate of more than 30%. During the reporting period, the revenue of China was 5.8 billion yuan (+ 40%), accounting for 25% of the revenue contribution; The revenue in the United States was 12.15 billion yuan (+ 37%), accounting for 53%; The revenue in Europe was 3.72 billion yuan (+ 40%), accounting for 16%; The revenue of Japan, South Korea and other regions was 1.23 billion yuan (+ 41%), accounting for 6%.
Wuxi chemistry has driven the high growth of annual performance, which is expected to double in 2022. The chemical business segment continued to build an “integrated, end-to-end” crdmo business, with strong order demand. In 2021, the revenue of chemical business was about 14.09 billion yuan, with a year-on-year increase of about 46.9%, driving the rapid growth of the company’s annual performance. Among them, the service revenue of small molecule drug discovery (R) was 6.17 billion yuan (+ 43.2%); The service revenue of process R & D and production (D & M) was 7.92 billion yuan (+ 49.9%), the platform pipeline continued to expand, 14 commercial projects were added, and a total of 1666 molecules were in the pipeline. At the same time, the number of cdmo service customers (25-57) and the number of molecules (39-99) of oligonucleotide and polypeptide drugs increased by 128% and 154% respectively, and the D & M revenue of oligonucleotide and polypeptide drugs reached US $115 million. The company expects that the revenue growth of the chemical business segment in 2022 will nearly double that of 2021.
Wuxi testing and Wuxi biology performed well, and other businesses made steady progress. 1) In 2021, Wuxi testing achieved revenue of 4.53 billion yuan (+ 38.0%), including laboratory analysis and testing revenue of 3.05 billion yuan (38.9%), which continued to maintain its leading position in the industry. Its main driving force was the continuous expansion of production capacity, the rapid growth of on-hand orders and service projects, and a strong and stable supply chain; The revenue of clinical cro and SMO is 1.48 billion (36.2%), providing clinical trial development services for a total of about 240 projects. At the same time, giving play to the synergy of Wuxi testing platform to explore preclinical projects, it is expected to continue to promote the diversion to downstream clinical cro and SMO in the future. 2) Wuxi biology achieved a revenue of 1.99 billion yuan (+ 30.0%), driven by the strong and extensive service capacity of new molecular types, and the revenue related to macromolecular biological drugs and new technologies increased by 75% year-on-year. The company expects the performance of this sector to continue to grow. 3) Wuxi ATU achieved a revenue of 1.03 billion yuan (- 2.8%), and the decline in revenue was mainly affected by the delay of customer product listing declaration in the United States and covid-19 epidemic. The company continued to strengthen the construction of ctdmo service platform of cell therapy, and provided process development and production services for 58 preclinical and phase I clinical trial projects, 5 phase II clinical trial projects and 11 phase III clinical trial projects. Four projects are in the stage of submitting listing application soon. It is expected that 2022 will usher in a growth inflection point, and the growth rate will exceed the industry average. 4) Wuxi ddsu achieved a revenue of 1.25 billion yuan (+ 17.5%), completed 26 ind applications and approved 23 CTAs. At present, one project is in NDA stage, and 3 / 14 / 74 projects are in phase III / II / I clinical stage respectively. Among 144 projects that have been submitted to ina or are in clinical opening, about 70% of the clinical progress ranks among the top three similar candidate drugs in China. The business will be upgraded iteratively in 2022, and the revenue is expected to decline slightly, but the sales sharing model is expected to further open up profit growth space in the future.
The main business is expected to accelerate again in 2022. At the end of 2021, the company’s fixed assets were 8.54 billion yuan (+ 49.8%), and the construction in progress was 5.77 billion yuan (+ 87.0%). In 2022, the company will continue to increase capital expenditure, which is expected to be 9-10 billion yuan. In terms of production capacity, the company continued to promote production capacity expansion and global layout. The construction of production capacity in Changzhou, Taixing, the United States and other places is accelerating, and completed the acquisition of kuwei factory in Switzerland, which began to be consolidated in July 2021. In terms of customer development, the company adheres to the “long tail customer” strategy. By the end of 2021, the company has added more than 1660 customers and more than 5700 active customers. As of the end of the year, the company had 34912 employees (+ 2022912%). At the end of 2021, the company’s inventory was 5.91 billion yuan (+ 119.9%), and the contract liabilities were 2.99 billion yuan (+ 88.9%), both of which increased significantly. At the same time, the year-on-year growth rate of the company’s orders and sales revenue from January to February 2022 exceeded 65%. The full supply of the company’s production capacity and manpower combined with the rapid increase of customer orders, the company’s revenue is expected to reach a new high this year, realizing an increase of 65% – 70%.
Profit forecast: it is estimated that from 2022 to 2024, the company’s revenue will be 38.35/45.96/56.88 billion yuan respectively, with a year-on-year increase of 67.5% / 19.8% / 23.8% respectively; The net profit attributable to the parent company was 7.78/92.0/11.48 billion yuan respectively, with a year-on-year increase of 52.7% / 18.2% / 24.8% respectively. The current closing price corresponding to PE is 42 / 35 / 28 times respectively. The company is a crdmo leading enterprise with global competitiveness, and the track is still in a high momentum. With the gradual release of new production capacity and the large volume after the promotion of customer pipelines, it is expected to bring sustained growth to the company and maintain the “buy” rating.
Risk warning: covid-19 epidemic situation intensifies; Customer order execution and market development are not as expected; Decline in industry demand; Industry competition intensifies; Policy risk.
