\u3000\u3 Shengda Resources Co.Ltd(000603) 456 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) )
Events. The company issued the annual report of 2021. In 2021, the company realized an 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%; Deduct non net profit of 573 million yuan, with a year-on-year increase of 77.86%.
In Q4 of 2021, the company realized an operating revenue of 1.059 billion yuan, with a year-on-year increase of 17.47%; The net profit attributable to the parent company was 161 million yuan, a year-on-year increase of 13.85%; Deduct non net profit of 136 million yuan, with a year-on-year increase of 22.67%. The company released the first quarterly report of 2022. The company achieved an operating revenue of 1.374 billion yuan in Q1 of 2022, with 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%; Deduct non net profit of 196 million yuan, an increase of 102.28% year-on-year.
Viewpoint: the performance in 2021 is in line with expectations, and the performance in 2022q1 is much higher than expected, with explosive growth.
The company’s performance in 2021 was in line with expectations, and the performance in the first quarter of 2022 was much higher than expected, with explosive growth. The company’s performance in 2021 is around the median value of the forecast, which is in line with expectations. In 2022, Q1’s performance achieved explosive growth, with parent company growth rate of 120% and non growth rate of 102%. On the premise of 2021q1’s high base, it continued to grow explosively, greatly exceeding market expectations.
Cdmo sector increased 79% year-on-year, accounting for 57% of the total revenue, and the number of projects increased rapidly; The API sector grew steadily.
The revenue of characteristic API and intermediate business (API business) was 1.31 billion yuan, a year-on-year increase of 16%, accounting for 32% of the total revenue. Cdmo business revenue was 2.311 billion yuan, with a year-on-year increase of 79%, accounting for 57% of the total revenue. Cdmo business grew rapidly and the proportion of revenue increased significantly (38% in 2019 and 49% in 2020). The number of cdmo projects of the company is also increasing rapidly. At present, 20 projects of the company have been commercialized; 49 projects are in clinical phase III, and these projects are expected to become an increase in the revenue of commercial projects in the past two years; 582 projects are in clinical phase II and phase I, and early clinical projects are increasing rapidly. In 2021, the company successfully promoted one NDA new drug project of customers to pass the on-site verification of nmpa API, and one NDA project was approved for listing. The company’s cdmo sector funnel-shaped project structure has been formed.
The financial indicators of the overall statements are stable, and the R & D investment increases rapidly. The gross profit margin of the company’s sales in 2021 was 33.33%, a decrease of 4.18 PCT compared with last year (37.51%), which we believe is mainly due to the impact of product structure and the rise of upstream costs. The net interest rate was 15.61%, an increase of 1.26pct compared with last year (14.35%). R & D expenditure was 188 million yuan, a year-on-year increase of 65%, and R & D investment increased rapidly.
Re combing the company’s investment logic: Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) is a highly attractive target with high valuation and cost performance in the cdmo sector, with fast performance growth and high certainty.
1) high cost performance: the position of the company is only 40 times that of this year. The valuation in the cdmo sector is relatively low, and there is room for the valuation to rise;
2) high growth rate: the company has achieved high growth for several consecutive quarters, and is expected to increase by about 40% this year, which is still possible to exceed expectations;
3) high certainty: the three major Novartis varieties continue to be in large quantities, and are expected to undertake new commercialized orders from other pharmaceutical enterprises, as well as other post clinical orders are expected to contribute to the increase of commercialization, helping the company’s sustained performance growth.
Profit forecast and valuation. According to the latest annual report, we adjusted the profit forecast. It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 5.599 billion, RMB 7.319 billion and RMB 9.638 billion respectively, with corresponding growth rates of 37.8%, 30.7% and 31.7% respectively; The net profit attributable to the parent company was 894 million yuan, 1.211 billion yuan and 1.626 billion yuan respectively, with the corresponding growth rates of 41.1%, 35.4% and 34.3% respectively, and the corresponding PE was 43x, 32x and 24x respectively. Maintain the “buy” rating.
Risk warning: price fluctuation risk of API; The product volume of Novartis is lower than the expected risk; The company’s new project promotion is less than the expected risk.
