\u3000\u3 Guocheng Mining Co.Ltd(000688) 202 Shanghai Medicilon Inc(688202) )
Key investment points
Performance overview: the sector continues to grow at a high pace, and its profitability has reached an all-time high
The company’s revenue in 2021 was 1.167 billion yuan, yoy75%, and the net profit attributable to the parent company was 282 million yuan, yoy118 million yuan 12%, all in line with the express value. In 2021, the gross profit margin was 45.34%, with a year-on-year increase of 4.27pct, and the net profit margin was 24.39%, with a year-on-year increase of 4.24pct. Under the effect of scale, the profitability was significantly optimized, reaching an all-time high. In terms of sectors, the revenue from drug discovery and pharmaceutical research is 613 million and yoy72 million 68%, preclinical research revenue of 554 million, yoy78%, almost synchronous growth, and the integrated synergistic effect appears.
The profitability has reached the first-line level and may be basically flat in the next 2-3 years
The gross profit margin of the company in 2021 was 45.34%, including 42.18% of the gross profit margin of drug discovery and pharmaceutical research. The per capita income was 440000, an increase of 5.04 PCT year-on-year; The gross profit margin of the preclinical sector was 49%, which increased by 3.25 PCT year-on-year on the basis of the increase in the price of dynamic costs, and the per capita income was 764500, both reaching a high level in the industry. We expect that the gross profit margin from 2022 to 2023 will be basically the same as that in 2021, and the net profit margin may fluctuate slightly under the influence of equity incentive and other expenses.
The turnover rate of accounts receivable and contract liabilities increased significantly, and the industrial status improved significantly
The company’s cash flow from operating activities in 2021 was 453 million, yoy 118%, which was basically the same as the growth of net profit, but the structure was significantly improved. Among them, the turnover rate of accounts receivable increased from 4.87 times to 6.43 times, and the contract liabilities increased by about 100 million, about five times the added value in 2020, indicating the obvious improvement of the company’s industrial status. In addition, the inventory increased from 32.69 million to 83.48 million in 2021, all contributed by the improvement of raw materials. We believe that under the tight supply of non-human primate models, it shows that the company’s sufficient stock can ensure the execution of orders.
Internationalization is an important focus in 2022
The company has set up an international R & D department and hired Dr. Dai Xuedong, who has working experience in pharmaceutical enterprises and cros at home and abroad such as Xi’an Janssen, GSK and xenoport, as the executive vice president of the international R & D department. We expect the company’s international expansion to accelerate again in 2022 and improve the company’s international brand status and ceiling.
Profit forecast and valuation
Based on the support of the company’s orders in hand and production capacity, we expect EPS to reach 7.90, 12.02 and 18.22 yuan respectively from 2022 to 2024, corresponding to the closing price of PE on April 6, 2022, which are 51, 33 and 22 times respectively. Maintain the “overweight” rating with reference to the higher growth rate of comparable companies and companies in the field of preclinical comprehensive services
Risk tips
The price of raw materials has risen, the prosperity of innovative drugs has declined due to the impact of policies, the loss of core technicians, the rise of human costs, and the company’s management risks.
