\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. In 2021, the company achieved an operating revenue of 4.06 billion yuan, a year-on-year increase of 53.5%; The net profit attributable to the parent company was 630 million yuan, a year-on-year increase of 66.6%; The net profit deducted from non parent company was 570 million yuan, with a year-on-year increase of 77.9%. In 2022q1, the company achieved an operating revenue of 1.37 billion yuan, a year-on-year increase of 60.5%; The net profit attributable to the parent company was 210 million yuan, a year-on-year increase of 119.0%; The net profit deducted from non parent company was 200 million yuan, with a year-on-year increase of 102.3%. comment:
The performance of the whole year in the 21st century and Q1 in the 22nd year increased rapidly, and the gross profit margin in the 22nd year is expected to rise steadily. By quarter, from 2021q1 to 2022q1, the revenue was RMB 860 / 10.1 / 11.4 / 10.6 / 1.37 billion (+ 118.7% / + 64.2% / + 54.0% / + 17.5% / + 60.5%), and the net profit attributable to the parent company was RMB 0.9/1.8/2.0/1.6/210 billion (+ 190.9% / + 86.0% / + 80.4% / + 13.9% / + 120.1%). The gross profit margin in 2021 was 33.3%, with a year-on-year decrease of 4.2pct. It is speculated that: 1) the company has more foreign currency settlement orders, and the decline of RMB exchange rate has a great impact; 2) Upstream raw materials rose; 3) The sales product structure has changed. The company’s Q1 gross profit margin rose to 35.4% in 22 years. The company actively took foreign exchange hedging and other means to reduce the impact of exchange rate. At the same time, it is expected that the gross profit margin in 22 years is expected to rise steadily with the stabilization of raw material prices, the gradual transmission of prices to the downstream and the improvement of the company’s production efficiency.
Cdmo business continues to make efforts, and the large volume of products from old customers and the expansion of new customers and new projects will contribute to future growth. In 2021, the company’s cdmo business, characteristic API and intermediate business achieved revenue of 2.31 billion yuan (+ 78.7%) and 1.31 billion yuan (+ 16.3%) respectively. The company’s cdmo business has achieved rapid growth. It is speculated that: 1) the large variety and large volume of old customers, the revenue of cardiovascular and anti-tumor products is 1.24 billion yuan (+ 101.1%) and 430 million yuan (+ 104.4%) respectively. The large volume of downstream customers such as entresto and kisquali of Novartis drives the increase of the company’s order volume; 2) In addition to continuing to cultivate Novartis, Roche, Beida and other major pharmaceutical enterprises in China, the company also actively expanded new customers and new projects. In the whole year of 21, the cumulative number of customers served exceeded 800. By the end of 21, there were 582 / 49 / 20 clinical phase I and II projects, 142 / 9 / 4 clinical phase III and commercialization phase projects respectively, with a significant increase in early projects, further optimization of project structure and prominent funnel benefits. Through the combination of “internal construction and external M & a”, the company further improved its production capacity. The construction of Ruibo Taizhou new base was started in 2021. At the same time, it completed the acquisition of 100% equity of Taihua Hangzhou factory at the end of the year, further improving the ability to undertake future business orders. The listed products of many old customers of the company are still in a large-scale period. At the same time, with the expansion of new customers and new projects and the gradual promotion of the clinical progress of products in the pipeline, the company’s future performance is expected to usher in sustained high growth.
Profit forecast: we expect that from 2022 to 2024, the company’s revenue will be 5.24/68.5/8.93 billion yuan respectively, with a year-on-year increase of 29.0% / 30.6% / 30.5% respectively; The net profit attributable to the parent company was RMB 860 million / 1.27 billion / 1.71 billion respectively, with a year-on-year increase of 35.9% / 47.1% / 35.1% respectively. The current closing price corresponding to PE is 43 / 29 / 22 times respectively. The large volume of products of the company’s old customers and the expansion of new customers and new projects drive the rapid growth of cdmo business in the future. At the same time, with the continuous approval of products, the API business is expected to achieve steady growth, cover for the first time and give a “buy” rating.
Risk warning: loss of customer orders; Price rise of raw materials; Exchange rate fluctuations; Loss of core technical personnel; Industry competition intensifies; Order delivery is not as expected; Policy risk.
