\u3000\u3 Guocheng Mining Co.Ltd(000688) 356 Jenkem Technology Co.Ltd(688356) )
Event: the company released its annual report for 2021, and achieved an operating revenue of 351 million yuan in 2021, an increase of 88.2% year-on-year; The net profit attributable to the parent company was 176 million yuan, a year-on-year increase of 105.2%; The net profit deducted from non parent company was 157 million yuan, with a year-on-year increase of 89.7%.
Comments:
The annual income is in line with expectations, and the centralized expenditure of Q4 expenses has a short-term impact on the apparent profit index. From the perspective of the whole year, the company’s revenue and profit have increased significantly year-on-year. The revenue growth is mainly due to the increase of orders brought by the large volume of several long-term biological agents from Chinese customers, the increase of technical service revenue and the continuous maintenance and development of overseas markets. In terms of sub regions, the annual revenue of China was 165 million yuan (+ 79.4%), and that of foreign regions was 186 million yuan (+ 87.4%), both of which achieved rapid growth. Quarterly, Q1-Q4 revenue is 69.9 / 85.8 / 106.0 / 89.4 million yuan (+ 159% / + 123% / + 76% / + 47%), Q1-Q4 net profit attributable to parent company is 36.0 / 44.6 / 61.7 / 33.4 million yuan (+ 230% / + 165% / + 118% / + 13%), Q1-Q4 net profit deducted from non attributable to parent company is 35.1 / 42.5 / 52.7 / 26.9 million yuan (+ 243% / + 180% / + 87% / – 8%), The gross profit margin of Q1-Q4 is 85.0% / 84.4% / 88.4% / 82.3% (+ 3.0 PCT / + 3.5 PCT / – 3.2 PCT / – 3.0 PCT) respectively. Among them, Q4 revenue decreased significantly month on month, mainly because overseas customers concentrated on Q3 for goods preparation during holidays. Q4 net profit decreased significantly month on month, mainly due to the centralized recognition of R & D expenses, equity incentive, bonus accrual and other expenses. At the same time, Q4 investment income and non recurring profit and loss decreased significantly compared with the first three quarters, and the product sales structure changed slightly, which also had a certain impact on the net profit in the fourth quarter. In the second half of the year, the gross profit margin decreased significantly, mainly due to the amount of share based payment included in operating costs. After excluding the impact of share based payment, the gross profit margin of product sales was 85.6%, an increase of 1.2 PCT over the previous year. The company’s equity incentive and R & D expenses are conducive to the company’s long-term development, and the company’s product sales are expected to maintain a high profit level.
The rapid and large-scale commercialization of products by customers and the promotion of customer pipelines are expected to drive the further growth of the company’s performance. In 2021, the sales revenue of the company’s top five customers (only the fifth largest customer is new) was 223 million yuan, with a year-on-year increase of 92.0% and accounting for 66.4% of the total revenue. The rapid volume of customer commercialized products has greatly driven the rapid growth of the company’s performance. The company has more than 20 pharmaceutical and mechanical products from Chinese customers applying for clinical trials in China, accounting for about two-thirds of the projects in China; In the international market, the company has supported nearly 30 new drug varieties at or near the clinical stage and more than 10 medical device varieties at the clinical stage, involving many innovative varieties such as PEGylated peptides, cytokines, nucleic acid drugs and small molecule drugs. It is expected that new drugs will be put on the market for overseas customers in 2023. With the promotion of customer pipeline and the listing of products, the company is expected to obtain more large orders
The self-developed pipeline is pushed forward in an orderly manner, opening a new growth curve. In 2021, the company further increased R & D investment, enabled product R & D and pipeline promotion, with R & D expenditure reaching 54 million yuan (+ 105%), and R & D personnel expanding to 58 (+ 93%). The company’s product PEGylated irinotecan completed the enrollment of the first subject in clinical phase II on November 16. It is expected to complete all enrollment in 2022, and the second clinical indication has been submitted to ind; Jk-22k and jk-21k are expected to enter clinical immunosuppressive phase in 2022.
Profit forecast: Based on the information of the company’s annual report, we adjusted the previous performance forecast and increased the performance forecast for 2024. It is estimated that from 2022 to 2024, the company’s revenue will be RMB 469 / 600 / 743 million respectively, with a year-on-year increase of 33.5 / 28.0% / 23.8% respectively; The net profit attributable to the parent company was 237 / 283 / 363 million yuan respectively, with a year-on-year increase of 34.6% / 19.6% / 28.4% respectively. The current closing price corresponding to PE is 47 / 40 / 30 times respectively. The company is a leading medical peg enterprise with global competitiveness. With the release of new production capacity in Panjin in the second half of this year, the production capacity problem can be effectively solved. In the future, the application of new scenarios, the large volume of orders from old customers and the promotion of self-developed products are expected to bring new growth to the company and maintain the “buy” rating.
Risk tips: market promotion risk, gross profit margin decline risk, core technology iteration risk, polyethylene glycol derivative synthesis technology and products can not meet customer needs, customer order loss and R & D failure risk.
