\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Key investment points
Event: on April 10, 2022, the company released the performance forecast for the first quarter of 2022. In 2022, the company is expected to achieve an operating revenue of 8.474 billion yuan, a year-on-year increase of 71.18%; The net profit attributable to the parent company was 1.643 billion yuan, a year-on-year increase of 9.54%; The net profit deducted from non parent company was 1.714 billion yuan, with a year-on-year increase of 106.52%; After adjustment, the net profit attributable to the parent company of non IFRS was RMB 2.053 billion, with a year-on-year increase of 85.82%.
Revenue and non IFRS parent company exceeded expectations and accelerated growth throughout the year is expected. The company expects the revenue of the first quarter of 2022 to be RMB 8.474 billion (year-on-year + 71.18%, month on month + 32.81%), exceeding 65-68% of the 2022q1 guidelines disclosed in the previous key business data in January and February. In addition, after deducting the impact of exchange rate, the revenue increases faster with constant exchange rate, which is expected to reach 78.47%. It is estimated that in 2022q1, the net interest rate of non deduction is 20.23% (year-on-year + 3.46pp), and the net interest rate of non IFRS attribution is 24.22% (year-on-year + 1.91pp). We expect that the accelerated growth of revenue, non deduction and non IFRS attribution is mainly due to: ① the smooth implementation of crdmo strategy, strong order demand and continuous strong main business; ② The small molecule cdmo business model of “following and winning molecules” ushered in the harvest period, which was caused by the continuous release of new production capacity and commercial orders. Meanwhile, the net interest rate attributable to the parent company in 2022q1 is about 19.39% (year-on-year -10.91pp). We expect that the slowdown of the growth rate attributable to the parent company and the fluctuation of the net interest rate are mainly caused by the expected changes in fair value and the sharp decline in investment income in the current period, resulting in a net loss of about RMB 179 million (- 83.16%).
The five major sectors continue to make efforts, and long-term growth can be expected. 1) Wuxi chemistry: “end-to-end, integrated” crdmo business model continues to be realized: ① small molecule drug discovery service (R): as a front-end funnel continuous drainage project, it lays the foundation for the continuous growth of the back-end. ② Cdmo (process R & D and production): “follow and win molecules” is progressing smoothly. In 2021, there were 42 commercial projects (year-on-year + 50.0%), and the superimposed new production capacity is constantly released, which is expected to usher in a new round of high-speed growth period; 2) Wuxi testing: ① laboratory analysis and testing services: comprehensive testing of drugs and equipment, and continuous high increase in availability after the subsequent production capacity is gradually put into operation; ② Clinical cro and SMO: SMO has significant scale advantages, and mutual drainage with CDs is expected to bring new increment. 3) Biological business (Wuxi Biology): model reserves are abundant. With the continuous expansion of laboratory capacity, we expect the revenue scale to continue the rapid growth momentum in recent years. 4) Cell and gene therapy ctdmo (Wuxi ATU): the first mover advantage enjoys the industry dividend. China is growing rapidly and is expected to return to the rapid growth track after the recovery of overseas epidemic. 5) China new drug research and Development Service Department (Wuxi ddsu): the first sales sharing project applies for NDA, which is expected to gradually enjoy the benefits of new drug success.
Profit forecast and investment suggestions: we expect the company’s revenue to be 36.817 billion yuan, 44.073 billion yuan and 54.283 billion yuan from 2022 to 2024, with a year-on-year increase of 60.75%, 19.71% and 23.17%, and the net profit attributable to the parent company to be 8.485 billion yuan, 9.891 billion yuan and 12.892 billion yuan, with a year-on-year increase of 66.46%, 16.57% and 30.34%. The company’s track is in a high boom, and the “integration, end-to-end” strategy is expected to consolidate competition barriers, drive the company’s long-term rapid growth and maintain the “buy” rating.
Risk warning events: the public materials used in the research report may have the risk of information lag or untimely update; Risk of loss of core technical personnel; Risk of industry R & D investment falling short of expectations; The risk that overseas business integration does not meet expectations; The risk of intensified industry competition; Exchange rate fluctuation risk.
