\u3000\u3 China Vanke Co.Ltd(000002) 821 Asymchem Laboratories (Tianjin) Co.Ltd(002821) )
Matters:
The company released its annual report for 2021. The annual revenue was 4.639 billion yuan (+ 47.28%), the attributable net profit was 1.069 billion yuan (+ 48.08%), and the attributable net profit after deduction was 935 million yuan (+ 45.22%). It is in the upper half of the previous forecast interval.
Dividend plan: pay out 8.00 yuan (including tax) for every 10 shares and increase 4 shares.
Ping An View:
With large orders, Q4 achieved accelerated growth
The company’s business grew rapidly in the first three quarters of 2021. Driven by large orders, Q4 achieved a revenue of 1.716 billion yuan (+ 60.83%, under the same exchange rate caliber (+ 66.61%) and a deduction of non attributable net profit of 339 million yuan (+ 80.88%). During the year, the revenue from large orders was 1.231 billion yuan, and it is estimated that most of the delivery work was completed during Q4. The company’s comprehensive gross profit margin in the quarter was 43.32% (year-on-year + 0.44pp), maintaining a high gross profit margin under the negative impact of exchange rate.
The company achieved annual revenue of 4.639 billion yuan (+ 47.28%, under the same exchange rate caliber + 56.13%). From the perspective of product stage, both clinical and commercial businesses have achieved rapid growth, and the growth rate of commercial projects is better due to large orders; From the regional perspective, China’s Chinese mainland’s revenue has reached 641 million yuan (+72.95%), accounting for 13.82% (+2.05pp) of revenue. It has well verified our previous judgement on China’s business entering the fast peg period. The company has more than 30 orders in China’s NDA stage, an increase of more than 5 over the same period last year. The company’s business volume in China has just started.
At present, the total amount of orders in hand of the company reaches US $1.898 billion. Large orders and other regular business orders support the rapid development of the company in the new year. In order to match the production demand in 2022, the company reserves a large number of raw materials. The inventory at the end of 2021 reached 1.396 billion yuan (+ 92.18%), mainly composed of raw materials and products in process.
On the other hand, the company’s Q4 orders were delivered intensively. Considering the 2-3-month collection cycle, accounts receivable of 1.816 billion yuan (+ 84.18%) were formed. Under the joint action of accounts receivable and raw materials in reserve, the company’s net cash flow at the end of the year decreased significantly. This situation is only caused by cross-sectional data and has nothing to do with the company’s cash recovery capacity, so investors need not worry.
Emerging businesses are developing rapidly, and chemical macromolecules are emerging
The company’s emerging business achieved an annual revenue of 398 million yuan (+ 67.43%). Among them, the chemical macromolecule (+ 42.48%) and preparation business (+ 80.33%) are relatively mature, and the estimated business scale has reached more than 100 million yuan.
In the chemical macromolecular business, the global research and development heat of small nucleic acid drugs is high, but there is a lack of production capacity and new technology. The company has established kilogram small nucleic acid production capacity through self construction and cooperation with Suzhou Ruibo. After the opening of relevant workshops in 2022, the volume of the company’s chemical macromolecular business is expected to expand rapidly and become an important driving force for the growth of the company.
40% of the revenue of the preparation business comes from orders from foreign customers such as the United States and South Korea. The company’s preparation capacity has been preliminarily recognized by international customers. In China, two projects have completed the production of NDA registration batch and process validation batch, which is expected to trigger NDA audit in 2022 and realize commercial supply thereafter.
The clinical cro sector has realized the acquisition and integration of Guanqin and yipukono, and built a combination of clinical research + mathematical statistics. In the next step, the company will expand its business to the United States to provide one-stop services for Chinese customers serving China US double reporting projects. The biological macromolecule business is still under construction. After several years of running in, the company has extended from laboratory supply to large-scale supply, with orders on hand reaching 130 million yuan, of which a considerable part is expected to be converted into revenue in 2022.
Production capacity construction goes on and on, and technical capacity is improved to ensure the driving force of long-term development
In order to meet the business needs of all aspects, the company has carried out capacity construction without stopping. At the end of 2021, the company’s fixed assets (2.244 billion yuan, + 46.19%) and projects under construction (1.047 billion yuan, + 56.05%) increased significantly. In 2022, the company’s capex will further accelerate, and new workshops will be launched in Dunhua and Tianjin. By the end of 2022, the production capacity of small molecular batch reactor will increase by 46% on the basis of 4700 cubic meters by the end of 2021. Considering that continuous reaction technology has been applied in many large-scale production of the company, the actual increase of new production capacity will be greater than the increase of cubic number.
Asymchem Laboratories (Tianjin) Co.Ltd(002821) is famous for its enthusiasm for the application and transformation of new technologies in the industry. Now it also pursues the repeated iteration and large-scale application of technologies as always. The company has four technology centers, which focus on exploring biosynthesis technology, emerging chemical process, continuous technology and automatic and digital intelligent manufacturing technology. When these technologies are successfully transformed into drug mass production, not only their own business can benefit from them, but also the company can license these technologies to companies in other fields, improve the production capacity of Companies in other fields and share the benefits.
Maintain a “strongly recommended” rating. We are full of confidence in the rapid development of China’s cdmo industry. Asymchem Laboratories (Tianjin) Co.Ltd(002821) as a leading enterprise in the industry, we have successfully seized the opportunity brought by the global large order of covid-19 oral drugs, accelerated the expansion of production capacity, technology and new business, and further opened the gap with other enterprises. Considering the rhythm of order execution and changes in share capital of the company, the EPS forecast for 20222024 is adjusted and added to 9.04, 9.71 and 11.96 yuan (the original forecast was 8.98 and 9.42 yuan from 20222023). Maintain a “strongly recommended” rating.
Risk tips: 1) if the proportion of global drug innovation investment and outsourcing is lower than expected, it will affect the development of cdmo industry; 2) The failure of drug research and development will lead to the termination of the project and the loss of corresponding orders by cdmo; If the sales of drugs on the market are less than expected, cdmo orders will not be able to be sold smoothly; 3) In case of production accidents, receiving warning letters from regulatory authorities or other situations that can not meet the needs of customers, the enterprise may lose orders and even customers; 4) The main customers are from Europe and the United States. Orders are denominated in foreign currencies. Exchange rate fluctuations may cause exchange gains and losses.
