Pharmablock Sciences (Nanjing) Inc(300725) company information update report: convertible bonds are landed, and the rapid development of cdmo business is imminent

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The implementation of convertible bonds and the rapid development of cdmo business are imminent

On April 17, Pharmablock Sciences (Nanjing) Inc(300725) issued the announcement on issuing convertible corporate bonds to unspecified objects, and the issuance of convertible bonds was implemented. Zhejiang Huishi is mainly engaged in cdmo business of APIs and intermediates, and its business capacity covers process development, pilot test and large-scale production of APIs and key intermediates. We believe that the existing businesses of Zhejiang Huishi and Pharmablock Sciences (Nanjing) Inc(300725) have strong synergy in the industrial chain. The implementation of the convertible bond project will comprehensively improve the service capacity of Pharmablock Sciences (Nanjing) Inc(300725) cdmo from the R & D end and manufacturing end. It is expected that the cdmo business will usher in a rapid development stage. Based on the advantages accumulated in innovative molecular blocks, Pharmablock Sciences (Nanjing) Inc(300725) continuously expanded the whole industrial chain of innovative drug outsourcing services, vertically integrated the cdmo business of innovative drugs such as "non GMP / GMP intermediates API preparations", and further built an innovative drug discovery technology platform to provide customers with new drug screening services. Affected by the epidemic, exchange rate and delayed release of new production capacity, we lowered our profit forecast for the company. It was originally estimated that the net profit attributable to the parent company from 2021 to 2023 was 511 / 407 / 586 million yuan, EPS was 2.56/2.04/2.93 yuan respectively, and adjusted to the net profit attributable to the parent company from 2021 to 2023 was 480 / 394 / 525 million yuan, EPS was 2.40/1.97/2.63 yuan respectively. The current share price corresponding to PE was 35.0/42.6/31.9 times respectively. The company's cdmo business is about to usher in a period of rapid development, We maintain a "buy" rating.

Comprehensively improve cdmo business capabilities and lay a solid foundation for rapid performance growth

In terms of talents, the company has successively introduced many senior experts in the field of cdmo. We believe that the introduction of high-end talents in the pharmaceutical manufacturing industry will quickly strengthen the company's cdmo business strength; In terms of production capacity, Zhejiang Huishi has an existing production capacity of 350 cubic meters, an increase of 90% over the end of 2021. The continuous release of production capacity has laid the foundation for the rapid growth of the company's cdmo business of key intermediates and APIs in the next 2-3 years; In terms of customers and projects, with its excellent design, synthesis and supply capacity in the field of molecular blocks, the company has established cooperative relations with large multinational companies such as Lilly and biotechnology companies such as vertex and Baiji Shenzhou, and has reserved a large number of high-quality customers and rich cdmo projects, and the funnel effect will gradually appear. Based on the above factors, we expect that Pharmablock Sciences (Nanjing) Inc(300725) cdmo business will usher in a rapid growth stage, and the performance growth will be highly sustainable.

Risk tips: the landing of cdmo capacity is less than expected, the risk of customer loss, and the landing of raised investment projects is less than expected.

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