\u3000\u3 China Vanke Co.Ltd(000002) 821 Asymchem Laboratories (Tianjin) Co.Ltd(002821) )
Report guide
Large orders continued to advance, optimistic about the annual profitability improvement trend. We emphasize the certainty of accelerating the compound growth rate of the company’s revenue from 2022 to 2025, and maintain the “buy” rating.
Key investment points
Performance overview: we expect that Q1’s large orders will be around 1 billion, and the business outside large orders will grow strongly
2022q1 performance: the revenue is 2.062 billion (yoy165.28%), the net profit attributable to the parent company is 499 million (yoy223.59%), and the non net profit deducted is 486 million (yoy275.76%). The net cash flow from operating activities was 205 million (yoy103.27%), which was lower than the net profit, mainly due to the large increase of Q1 inventory under the promotion of large order execution.
Growth analysis: highlights are not just large orders
In addition to large orders, the revenue of stock business maintained rapid growth. Core conclusion: we estimate that the recognized revenue of large orders of American pharmaceutical enterprises is 970-1.05 billion, the revenue of non large order small molecule cdmo is 860930 million, and the revenue of emerging businesses is about 140 million. Excluding the large orders of American pharmaceutical enterprises, the revenue of yoy is expected to be 30% – 39% (mainly driven by the high growth of emerging businesses), with strong growth and the trend is expected to continue. Business analysis: according to the announcement of the first quarterly report, we split as follows: the small molecule cdmo business in 2022q1 increased by 165.9% year-on-year. The 2021q1 revenue structure was disclosed in the Hong Kong stock prospectus in 2021. We expect the small molecule clinical + Commercial cdmo revenue in 2022q1 to be around 1.9 billion. We assume that the growth rate of non covid-19 small molecule cdmo is 20% – 30%, which means that the small molecule cdmo revenue of non large orders is 860930 million, and the corresponding large orders may be 970-1.05 billion. In 2022q1, the revenue from emerging businesses is around 140 million (calculated according to the revenue disclosed in the first quarterly report, yoy157.4%). Therefore, the revenue from businesses other than large orders is 30% – 39% (driven by emerging businesses).
Profitability: year-on-year improvement, optimistic about the improvement trend of the whole year
The gross profit margin in 2022q1 increased by 2.37pct year-on-year by 45.24%. We believe that the increase in gross profit margin is due to the improvement of large-scale benefits under the execution of large orders on the one hand, and the low base under the influence of exchange in 2020q1 on the other hand. The net interest rate increased by 4.36 PCT year-on-year to 24.22%, mainly due to the decrease of 7.36 PCT in the expense rate (including the decrease of 4.78 PCT and 4.39 PCT in the management expense rate and R & D expense rate respectively). We are optimistic that the improvement of large-scale benefits in the implementation of large orders will lead to the improvement of profitability throughout the year.
Profit forecast and valuation
We expect the company’s EPS to be 10.12, 10.55 and 11.30 yuan / share from 2022 to 2024. The closing price on April 20, 2022 corresponds to 29 times of PE in 2022 (28 times of PE in 2023), maintaining the “buy” rating.
Risk tips
The risk of declining prosperity of global innovative drug R & D investment, the risk of new business expansion falling short of expectations, competition risk, exchange risk, the risk of order delivery falling short of expectations, and the risk of new production capacity falling short of expectations.
