\u3000\u3 Shengda Resources Co.Ltd(000603) 456 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) )
Event: the company released the annual report of 2021 and the first quarterly report of 2022.
The rapid growth of main business + the decline of expense rate during the period promoted the high growth of the company’s performance in 2021. In 2021, the company achieved 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 the net profit not attributable to the parent company of 573 million yuan, a year-on-year increase of + 77.86%. Looking at 2021q4 alone, the company achieved an operating revenue of 1.059 billion yuan, a year-on-year increase of + 17.47% and a month on month increase of – 6.79%; The net profit attributable to the parent company was 161 million yuan, with a year-on-year increase of + 13.85% and a month on month increase of – 18.92%; Affected by factors such as the delivery rhythm of the project, the performance of 2021q4 fluctuated month on month. The high year-on-year performance of the company in 2021 is mainly due to: (1) the rapid growth of cdmo business, anti infection and hypoglycemic API business; (2) Affected by factors such as scale effect, improvement of operation efficiency, reduction of interest expense and exchange loss, the expense rate of the company during the period decreased by 6.47pct to 14.69% year-on-year. Among them, the sales expense rate, management expense rate and financial expense rate decreased by 0.34pct, 3.58pct and 2.54pct respectively year-on-year. Affected by factors such as product structure and rising raw material prices, the company’s gross profit margin decreased by 4.18pct to 33.33% year-on-year. During the period, the decrease in expense rate offset the impact of the decrease in gross profit margin on the company’s net profit, driving the company’s net profit margin to increase by 1.26pct to 15.61% year-on-year.
The project pipeline is increasingly abundant, and the cdmo business is growing strongly. In 2021, the company’s cdmo business realized a revenue of 2.311 billion yuan, a year-on-year increase of + 78.67%, and the proportion of revenue increased by 8.03pct to 56.88% year-on-year; The gross profit margin decreased by 2.76pct to 38.58% year-on-year. During the reporting period, 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. By the end of 2021, the company had undertaken 582, 49 and 20 phase I / II, phase III and listed projects respectively, an increase of 32.88%, 22.50% and 25.00% respectively compared with the end of 2020. The company’s cdmo project pipelines are increasingly abundant, and the project funnel effect is gradually emerging, which will continue to boost the rapid growth of the company’s cdmo business. In December 2021, the company acquired 100% equity of Taihua Hangzhou subordinate to Teva group at the price of US $34 million, further expanding high-quality production capacity and improving the company’s business undertaking capacity.
Anti infective and hypoglycemic APIs grew well, and the gross profit margin of API business decreased year-on-year.
The revenue of API business was 1.31 billion yuan, a year-on-year increase of + 16.37%; Affected by factors such as rising raw material prices, the gross profit margin decreased by 5.51pct to 32.51% year-on-year. In terms of further breakdown, anti infective, central nervous, non steroidal and hypoglycemic drugs achieved revenue of RMB 451, 386, 212 and 260 million respectively, with a year-on-year increase of + 20.14%, + 0.29%, + 5.81% and + 57.69%, and the gross profit margin changed by – 13.60pct, – 2.51pct, – 2.24pct and + 2.53pct. During the reporting period, the company’s newly developed hypoglycemic products promoted the listing of customer preparation products in Europe. At present, the company has 17 generic drug preparation projects in different R & D stages. Among them, the preparation product aed-02 sustained-release tablet anda is in the stage of FDA approval and nmpa listing application, and the preparation product t2dm-02 sustained-release tablet has been accepted by nmpa listing application. In the future, the company’s API business is expected to maintain steady growth with the help of the approval and listing of generic drugs.
2022q1 performance growth exceeded expectations and profitability improved year-on-year. In 2022q1, the company achieved 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, a year-on-year increase of + 102.28%. The company’s performance growth in 2022q1 is mainly due to: (1) the company’s in-depth expansion of customers and product pipelines, further improvement of R & D and product delivery capacity, and good growth momentum of new business orders and projects; (2) The listed projects served by the company continued to be stable and large-scale, and the project income increased steadily in the commercialization stage; (3) Affected by the change of business structure and other factors, the gross profit margin of the company in 2022q1 increased by 4.11pct to 35.36% year-on-year.
Issue the equity incentive plan to ensure the rapid growth of the company’s performance. In March 2022, the company issued the 2022 restricted stock incentive plan (Draft). The company plans to grant 1845000 restricted shares to 297 incentive objects, accounting for 0.2216% of the total share capital of the company, and the grant price is 23.82 yuan / share. The performance assessment objective is: Based on the net profit in 2020, the net profit from 2022 to 2024 will not be less than 693 million yuan, 903 million yuan and 1.160 billion yuan respectively, with a year-on-year increase of + 20.88%, + 30.23% and + 28.57%.
Profit forecast and investment suggestions: from 2022 to 2024, the company is expected to realize a net profit attributable to the parent company of 901 / 1204 / 1594 million yuan, EPS of 1.08/1.45/1.91 yuan respectively, and the PE corresponding to the current stock price is 41.30/30.92/23.34 times respectively. Considering: (1) in the past three years, the compound growth rate of the company’s performance is about 47.11%, the average value of PE (TTM) is about 72.59 times and peg is about 1.54; (2) In the next three years, the compound growth rate of the company’s performance is expected to remain at about 36.00%; Give the company 50-55 times PE in 2022, and the corresponding target price is 54.00-59.40 yuan / share. If it is covered for the first time, give the company a “recommended” rating.
Risk tips: covid-19 epidemic risk, industry policy risk, exchange rate change risk, order growth less than expected risk, brain drain risk, Sino US trade friction risk, etc.
