\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Event overview
The company released its annual report for 2021: in 2021, the company achieved a revenue of 3.105 billion yuan, a year-on-year increase of 49.87%, a net profit attributable to the parent of 524 million yuan, a year-on-year increase of 61.49%, deducting a net profit not attributable to the parent of 503 million yuan, a year-on-year increase of 74.42%.
Performance forecast of Q1 in 2022: it is expected to achieve revenue of 1.357-1.466 billion yuan, a year-on-year increase of 150% – 170%, net profit attributable to parent company of 326344 million yuan, a year-on-year increase of 270% – 290%, deducting net profit attributable to non parent company of 324339 million yuan, a year-on-year increase of 330% – 350%.
API cdmo: the cro of the Chinese team is growing at a super high speed, and the API product upgrading strategy is gradually implemented
In 2021, cdmo of API realized a revenue of 3.069 billion, with a year-on-year increase of 51%. Among them, the revenue of cro business was 973 million yuan, with a year-on-year increase of 31%. The revenue of Chinese team was 743 million yuan (+ 112%), and the revenue of J-star was 230 million yuan (+ 8%). J-star also brought drainage to 60 projects for Chinese team, with significant synergy. Cdmo business achieved a revenue of 2.04 billion yuan, an increase of 66% year-on-year, of which API achieved a revenue of 290 million yuan (+ 55%), and the pipeline diversion effect of API cdmo business gradually appeared. 20 projects successfully entered the next development stage, and 2 innovative drugs were licensed to market. In 2021, the company has a production capacity of about 2019m3 (+ 65%), which highly matches the demand of customers’ orders.
Gene cell therapy cdmo: orders + teams + production capacity are growing rapidly, and the core competitiveness has been greatly improved
In 2021, cdmo of cell gene therapy achieved a revenue of 14 million yuan, a year-on-year increase of 897%. The company introduced 27 new projects and signed new orders of about 130 million yuan, mainly involving 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, viable bacteria project and other different types of services. At the same time, the number of employees reached 294, with a year-on-year increase of 216%. The laboratory on the fourth floor of Suzhou was put into use to further strengthen the company’s efforts in gene therapy process development Analysis and detection capabilities.
Preparation cdmo: realize the breakthrough of “from 0 to 1”, and the new production capacity will be put into operation at the end of 2022
In 2021, cdmo realized a revenue of 2016 million yuan. 31 new projects have been introduced into the preparation cdmo business, with new orders of 71.13 million yuan. It is expected that the first phase of the preparation production base will be put into operation in the fourth quarter of 2022. At that time, the preparation cdmo capacity circle will be further expanded and the layout of “DS + DP” end-to-end cdmo service platform will be further implemented.
The business efficiency is improved and the project structure is upgraded, and the profit side achieves super excellent performance
The super excellent performance of the profit side benefits from: 1) excluding the losses of preparation cdmo, gene cell therapy cdmo and joint-stock companies, the actual operating profit has a better performance, and the net profit attributable to the parent is 661 million yuan, an increase of 80% year-on-year. 2) Lean operation has greatly improved efficiency. In 2021, the capacity utilization rate will reach 72% (+ 2pct), and the production capacity will increase by 25%. 3) Increase in gross profit margin of segment business: the gross profit margin of cro segment is 48.07% (+ 3.74pct), and that of cdmo segment is 42.02% (+ 1.27pct).
Thanks to the delivery of large orders, Q1 performance in 2022 exceeded expectations
In 2022, Q1’s performance increased at an ultra-high speed. We believe that it is mainly due to the realization of higher than expected revenue brought by the delivery of large orders. We expect that more than half of the revenue from large orders will account for. At the same time, conventional projects will still maintain the same level in the same period. Due to the high added value of large orders, the net profit margin will also increase significantly, Q1 is about 24% and 2021 is 15%. Therefore, looking forward to the whole year, we believe that revenue and profit will have excellent performance.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.42 billion yuan, 1.58 billion yuan and 2.05 billion yuan respectively, corresponding to 37, 34 and 26 times of the current share price PE respectively.
Risk warning: the risk of performance falling short of expectations, new business investment risk and fixed asset investment risk.
