\u3000\u3 Shengda Resources Co.Ltd(000603) 127 Joinn Laboratories (China) Co.Ltd(603127) )
Key investment points
Event: on March 30, 2022, the company released its annual report for 2021. In 2021, the company realized an operating revenue of 1.517 billion yuan, a year-on-year increase of 40.97%; The net profit attributable to the parent company was 557 million yuan, a year-on-year increase of 76.96%; Net profit deducted from non parent company was 530 million yuan, with a year-on-year increase of 81.63%.
Strong performance growth, orders continued to increase, and new orders reached a record high in 2021. Quarterly, the company’s operating revenue in 2021q4 was 660 million (+ 48.49%), the net profit attributable to the parent company was 309 million yuan (+ 57.30%), and the net profit not attributable to the parent company was 313 million yuan (+ 61.81%). We expect that the main reasons are: ① the proportion of innovative therapy projects increased continuously due to the expansion of new technology platform; ② With the continuous expansion of R & D personnel and the continuous accumulation of technical experience, quantitative changes have produced qualitative changes, and the operation efficiency has been greatly improved; ③ The company continued to improve its capital management ability and brought additional income. In terms of orders, due to the continued strong demand for preclinical evaluation business and Zhaoyan’s professionalism and brand strength in this segment, the company signed new orders of 2.8 billion yuan in 2021, including about 2.55 billion yuan (+ 65%) in China. China’s overseas orders are about 160 million yuan (+ 100%), and biomere’s orders are 280 million yuan (+ 75%).
Preclinical evaluation + clinical one-stop service highlights frequently, and front-end and back-end collaboration is expected to drive long-term growth. 1) Preclinical evaluation service: the service capacity continues to expand and the production capacity continues to expand: in 2021, the company continues to expand the capacity circle in the fields of inhalation, ophthalmology and model animals. The 7500m2 animal room in Suzhou has been put into operation at the end of 2021. In order to meet the animal feeding demand, Zhaoyan (Suzhou) plans to add 20000m2 of animal feeding and management facilities, which is expected to be put into use in 2022h2. In addition, about 6000m2 experimental facilities newly renovated in Zhaoyan California in 2021 have also been put into use. We expect that with the continuous release of new production capacity, the fulfillment of orders on hand is expected to accelerate; 2) Clinical cro: the layout of the whole industry chain is gradually completed and is expected to gradually contribute new increment: the third phase I clinical center Taicang first people’s hospital was officially put into operation in 2021, with a total of 200 beds in the three clinical centers. In 2021, the linkage service of multiple cdmo + preclinical + clinical projects will be realized. With the gradual strengthening of front-end and back-end coordination, the company’s long-term growth can be expected.
Profit forecast and investment suggestions: considering the continuous strong orders of the company, we expect the company’s revenue to be RMB 2.126 billion, 2.812 billion and 3.576 billion from 2022 to 2024 (about RMB 2.126 billion and 2.812 billion before the forecast from 2022 to 2023), with a year-on-year increase of 40.20%, 32.26% and 27.15%, and the net profit attributable to the parent company to be RMB 733 million, 906 million and 1099 million (about RMB 724 million and 890 million before the forecast from 2022 to 2023), with a year-on-year increase of 31.52%, 23.50% and 21.38%. China’s preclinical evaluation outsourcing industry has a high prosperity and the leading position of the company is stable. In the future, it is expected to bring long-term growth and maintain the “buy” rating by expanding overseas markets and vertical extension of the industrial chain.
Risk warning events: the public information used in the research report may have the risk of information lag or untimely update. The risk of production capacity upgrading is not as expected, the risk of loss of core technicians, the risk of raw material supply and price rise, the risk of gross profit margin decline, the risk of less than expected integration after biomere acquisition, and the risk of exchange rate fluctuation.
