\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Event: the company released its annual report for 2021, which achieved annual revenue of 3.105 billion yuan (+ 49.87% YoY), net profit attributable to parent company of 524 million yuan (+ 61.49% YoY), and non net profit attributable to parent company of 503 million yuan (+ 74.42% YoY). At the same time, the company released the performance forecast for the first quarter of 2022, which is expected to achieve a revenue of 1.357 ~ 1.466 billion yuan (+ 150% ~ + 170% YoY), a net profit attributable to the parent of 326 ~ 344 million yuan (+ 270% ~ + 290% YoY), and a non net profit attributable to the parent of 324 ~ 339 million yuan (+ 330% ~ + 350% YoY).
In the past 21 years, all businesses continued to improve, and the profit of 22q1 exceeded our expectations. In 2021, the company’s API cdmo achieved a revenue of 3.069 billion yuan (+ 51% YoY), of which API product revenue was 290 million yuan (+ 55% YoY), and the product structure continued to upgrade; J-star achieved a revenue of 230 million yuan (+ 8% YoY) and channeled 60 projects for the Chinese team. In 2021, the company’s preparation cdmo achieved a revenue of RMB 2016 million. At the same time, there were 13 collaborative projects between API (DS) and preparation (DP); Cdmo for gene cell therapy achieved a revenue of 13.87 million yuan, an increase of 897% year-on-year. In 2022q1, the growth rate of the company’s profit side is significantly higher than that of the revenue side. We speculate that it is mainly due to the high gross profit margin of large orders and the low expense rate in the middle and first quarter of the year.
New production capacity is gradually released to ensure the continuous improvement of small molecule cdmo business. In terms of technology platform, in addition to continuously consolidating representative technology platforms such as crystallization, biocatalysis and fluid chemistry, the company plans to acquire 100% equity of Kaihui pharmaceutical to expand the cro capacity of small and medium molecules. In terms of production capacity, by the end of 2021, the company has three API cdmo production bases of “Chongqing Changshou – Jiangxi DONGBANG – Hubei Yuyang”, with a total production capacity of about 2019 cubic meters. Up to now, the company is gradually transforming the workshop of Yuyang pharmaceutical as planned. Changshou 301 workshop and Jiangxi Boteng phase II project are also in normal progress. The performance elasticity brought by the release of new production capacity is worth looking forward to.
The expansion of cdmo orders for gene cell therapy has accelerated, opening the medium and long-term ceiling of the company. In 2021, the company’s preparation cdmo and cell gene therapy cdmo suffered a total loss of about 106 million yuan. 1) Cdmo business of gene cell therapy: 27 new projects were introduced in 2021, and the newly signed orders were about 130 million yuan; We expect that with the acceleration of order expansion, order execution and gradual recognition of revenue, the profit loss is expected to gradually narrow from 2022. 2) Preparation cdmo business: 31 new projects were introduced in 2021, with new orders of 71.13 million yuan; We expect that with the production of 2022q4 preparation workshop, the contribution of the company’s preparation cdmo revenue is expected to gradually increase from 2023.
Profit forecast, valuation and rating: considering the gradual delivery of large orders of about US $900 million and the gradual narrowing of the losses of preparation cdmo and cell gene therapy cdmo, we raised the company’s net profit attributable to the parent company in 22-23 years to RMB 1.419/1.634 billion (66.3% / 53.6% higher than the original forecast respectively), and increased the forecast net profit attributable to the parent company in 24 years to RMB 1.760 billion. According to the latest equity calculation, EPS were 2.61/3.00/3.23 yuan respectively, and the current price corresponding to PE was 38 / 33 / 31 times respectively, Maintain the “buy” rating.
Risk warning: the revenue of large orders is less than expected; The transformation progress from early cro projects to later ones is less than expected; Commercial CMO order fluctuation risk; The promotion speed of strategic new business is lower than expected.
