\u3000\u3 Shengda Resources Co.Ltd(000603) 127 Joinn Laboratories (China) Co.Ltd(603127) )
The company released its 2021 annual report: in 2021, it achieved an operating revenue of 1.52 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%; The net profit after non deduction from the parent company was 530 million yuan, a year-on-year increase of 81.63%.
The performance is in line with expectations, and the main business continues to grow strongly: 1) the revenue from non clinical research services of drugs is 1.48 billion yuan (YoY 40.8%), and the main business growth continues to be strong. If we exclude the stable growth of biomere, we expect the service of the parent company in this sector to achieve faster growth. 2) The revenue from clinical services and other businesses was 30.51 million yuan (yoy45.5%), and the proportion of clinical service capacity and revenue was further improved. 3) The overall gross profit margin of the company is 48.73% (yoy-2.65 percentage points). We believe that it is mainly affected by the increase in the proportion of businesses with relatively lower gross profit margin. It is expected that the parent company’s drug non clinical research services will still achieve a gross profit margin of more than 50%. 4) The growth rate of net profit attributable to parent company and net profit deducted from non parent company is significantly higher than that of revenue. We expect that it will be mainly affected by the increase of income from changes in fair value (mainly from biological assets) during the reporting period (158 million at the end of the reporting period compared with 59 million at the beginning of the reporting period).
Excellent performance of key indicators and strong certainty of sustained and rapid growth: 1) more than 2.8 billion new orders were signed during the reporting period, maintaining rapid growth. Among them, domestic companies undertake orders of more than 2.55 billion (about 65% YoY) and biomere of about 280 million (about 75% YoY). 2) At the end of the reporting period, the orders on hand were about 2.9 billion, maintaining a rapid growth, and the cost of unfinished projects was 434 million yuan (yoy75%). We expect that the revenue side is expected to continue to achieve high growth in 2022.
Continue to expand production and build new capacity to improve the growth ceiling: 1) number of employees: increased to more than 2100 by the end of the reporting period (more than 40% of yoy is expected), keeping pace with the growth of income. 2) Capacity expansion: about 7500 square meters of feeding facilities in Suzhou have been put into operation before the end of 2021. At the same time, 1800 square meters of laboratory (P2) decoration and construction have been completed. In addition, about 20000 square meters of new building area in Suzhou (mainly feeding facilities, equipped with new power center, it room and other auxiliary facilities) is expected to be put into use in the second half of 2022, which will further improve the business flux of the company, Provide guarantee for long-term business execution and performance growth. 3) Jointly funded with Jiangsu Xiantong to build China’s leading drug release evaluation center in Wuxi, the interior decoration of the laboratory is being carried out, which will better meet China’s drug release R & D needs. 4) The construction of Guangzhou Zhaoyan Anping base was started in October 2021 to help the long-term development of the business. 5) Zhaoyan California invested about 6000 square meters of test facilities in the new decoration in 2021 to help the development of overseas business, and the shortage of facilities of overseas subsidiary biomere will be further alleviated.
Profit forecast and rating: we expect the net profit attributable to the parent company from 2022 to 2024 to be 740 million yuan, 941 million yuan and 1.2 billion yuan, with a year-on-year increase of 32.7%, 27.2% and 27.0%. The current share price corresponds to 60x, 47x and 37x. We are optimistic about the continuous growth of the company as a leader in the safety evaluation field of cro industry and the rapid development of new business, so as to maintain the “buy” rating.
Risk tip: the epidemic affects business risks, the demand for new drug research and development decreases, the expansion of new business is less than expected, the industry competition intensifies, and the risk of raw material supply.
