\u3000\u3 Shengda Resources Co.Ltd(000603) 456 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) )
Event:
Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) release the annual report of 2021 and the first quarterly report of 2022. The company achieved an annual operating revenue of 4.063 billion yuan, a year-on-year increase of 53.48%,; The net profit attributable to the parent company was 634 million yuan, a year-on-year increase of 66.56%; The net profit deducted from non parent company was 573 million yuan, with a year-on-year increase of 77.86%; The net operating cash flow of the whole year was 678 million yuan, a year-on-year increase of 69.21%. In 2022q1, the company realized an operating revenue of 1.374 billion yuan, a year-on-year increase of 60.46%; The net profit attributable to the parent company was 208 million yuan, a year-on-year increase of 120.13%; The net profit deducted from non parent company was 196 million yuan, with a year-on-year increase of 102.28%.
Comments:
Cdmo business makes efforts to drive high performance growth. In 2021, cdmo business realized revenue of 2.311 billion yuan, a year-on-year increase of 78.67%, and the proportion of business revenue increased by 8.02pp compared with the same period last year. The company has deeply expanded customers and product pipelines, improved R & D and product delivery capacity, and rapidly increased orders and projects. At present, it has 20 commercial projects (+ 25%), 49 phase III projects (+ 22.5%), and 582 phase I / II projects (32.88%), forming a sustainable funnel-shaped project structure of preclinical / clinical phases I, II and III, with obvious diversion effect. The company accelerated production capacity construction through “internal new construction and external M & a”. In 2021, the construction of Ruibo Taizhou new base was started, and the company acquired 100% equity of Taihua Hangzhou factory, which greatly improved the high-quality cdmo service capacity.
The API business achieved a breakthrough and the preparation business accelerated its growth. In 2021, the API business achieved a revenue of 1.31 billion yuan, an increase of 16.30% year-on-year. The newly developed hypoglycemic products promoted the approval and listing of customer preparation products in Europe, realizing a breakthrough. In 2021, the company had 17 generic drug preparation projects, and the preparation product t2dm-02 sustained release tablets obtained the notice of acceptance of nmpa listing application. The company acquired Zhulian pharmaceutical and kangchuanji Pharmaceutical (51% equity), and the subsidiary Siwei pharmaceutical 10 billion tablet preparation project is expected to be put into operation in 2022 to jointly build the integrated service capacity of API and preparation.
R & D contributes to growth, equity incentives enhance employee cohesion, further expand customer base and enhance comprehensive strength. The company continued to increase R & D investment. In 2021, it invested 188 million yuan, with a year-on-year increase of 65.01%. There were 788 R & D personnel, with a year-on-year increase of 35.86%. At present, it has built many technical platforms, such as chiral catalysis technology, continuous technology application research platform, fluorine chemistry technology, enzyme catalysis technology, polypeptide technology research platform and so on. After 2017 and 2020, the 2021 equity incentive plan continues to enhance employee cohesion. The enhancement of comprehensive strength attracts a large number of customers. In 2021, the number of global customers reached more than 800, and the customer structure continues to be optimized.
Profit forecast and investment rating: we expect the company’s operating revenue to be RMB 5.655/75.87/9.969 billion from 2022 to 2024, with a year-on-year increase of 39.2% / 34.2% / 31.4%; The net profit attributable to the parent company was 9.12/12.58/1.738 billion yuan respectively, with a year-on-year increase of 43.8% / 38.0% / 38.1%, corresponding to 43 / 31 / 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.
