\u3000\u3 Guocheng Mining Co.Ltd(000688) 202 Shanghai Medicilon Inc(688202) )
Event: Shanghai Medicilon Inc(688202) released the annual report of 2021. The company’s annual operating revenue was 1.167 billion yuan, a year-on-year increase of + 75.28%; The net profit attributable to the parent company was 282 million yuan, a year-on-year increase of + 118.12%; The net profit deducted from non parent company was 271 million yuan, a year-on-year increase of + 119.53%; New orders increased by 2.452 billion yuan, a year-on-year increase of + 87.66%.
Comments:
The revenue of the two sectors increased synchronously, and the newly signed orders guaranteed the performance. 1) The revenue of drug discovery and pharmaceutical research business was 613 million yuan, a year-on-year increase of + 72.68%, and the gross profit margin was 42.18%, a year-on-year increase of + 5.04pp; 2) The preclinical research business achieved an operating revenue of 554 million yuan, with a year-on-year increase of + 78.19%, and a gross profit margin of 48.77%, with a year-on-year increase of + 3.25pp. We believe that the orderly landing of the company’s laboratories, the continuous expansion of customers, the optimization of order structure and the improvement of operation efficiency have made the scale effect appear continuously and increased the gross profit margin; 3) In terms of newly signed orders, the newly signed orders for drug discovery were 682 million yuan, a year-on-year increase of + 76.59%, the newly signed orders for pharmaceutical research were 362 million yuan, a year-on-year increase of + 56.66%, and the newly signed orders before clinical treatment were 1.409 billion yuan, a year-on-year increase of + 104.24%, showing a synchronous high growth trend and balanced development of the sector.
The scale effect lowers the expense rate and greatly improves the profitability. In 2021, the company achieved a comprehensive gross profit margin of 45.34%, a year-on-year increase of + 4.27pp, and a net profit margin attributable to the parent company of 24.18%, a year-on-year increase of + 4.81pp, with a significant increase in profitability. The company’s period expense rate is 17.98% (- 0.79pp), of which the sales / management / R & D / financial expense rate is 3.83% (- 1.28pp) / 7.63% (- 0.18pp) / 6.66% (- 0.4pp) / – 0.14% (+ 1.06pp) respectively. The scale effect greatly reduces the sales expense rate, and the financial expense rate increases due to the decrease of interest income.
Continue to promote production capacity and R & D investment and enhance comprehensive capacity. In 2021, the total capacity of the company was 7.40wm2, and 6.69wm2 was put into use, with a year-on-year increase of 2.88wm2. The capacity was accelerated, the undertaking capacity was improved and the business development was promoted; At the same time, the company continued to invest in the construction of the technical platform for preclinical safety evaluation of biotechnology drugs such as protac platform and antibodies, so as to enhance the R & D service capacity. At present, there are 513 masters and doctors, with a year-on-year increase of + 57, accounting for 21%. The R & D technology and service capacity have been continuously improved, and the comprehensive strength has been continuously enhanced.
Profit forecast and investment rating: we expect the company’s operating revenue to be RMB 2.097/30.38/4.253 billion from 2022 to 2024, with a year-on-year increase of 79.6% / 44.9% / 40.0%; The net profit attributable to the parent company was 516 / 759 / 1090 million yuan respectively, with a year-on-year increase of 82.9% / 47.1% / 43.6%, corresponding to 48 / 33 / 23 times of PE from 2022 to 2024.
Risk factors: increased competition in the industry, decline in R & D investment and outsourcing demand in the pharmaceutical industry, China’s international policies, loss of core technicians and other risks.
