\u3000\u3 Shengda Resources Co.Ltd(000603) 456 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) )
Key investment points
Event: the company released the annual report of 2021 and the report of the first quarter of 2022. In 2021, the company realized 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 non net profit attributable to the parent company was 570 million yuan, a year-on-year increase of 77.9%. In 2022q1, the company achieved an operating revenue of 1.37 billion yuan (+ 60.5%), a net profit attributable to the parent company of 210 million yuan (+ 120.1%), and a non net profit attributable to the parent company of 200 million yuan (+ 120.3%), with performance growth exceeding expectations.
The cdmo sector continued to make efforts, and the number of order items increased rapidly. In 2021, the company’s cdmo business revenue was 2.31 billion yuan (+ 78.7%), accounting for 56.9% of the total revenue, and the proportion of revenue increased significantly (48.9% in 2020). The number of cdmo projects has increased rapidly, covering the treatment fields of anti-tumor, anti heart failure, anti-virus, central nervous system, cardio cerebrovascular and so on. At present, there are 20 commercial and clinical phase III projects (+ 25%) and 49 (+ 22.5%) respectively, which is expected to be transformed into the revenue increment of commercial projects in the past two years; 582 projects are in clinical phase I / II (+ 32.88%), the funnel-shaped project structure of cdmo pipeline has been formed, and the diversion effect is obvious.
The generic pharmaceutical sector achieved a breakthrough and the preparation business accelerated its growth. In 2021, the company’s API business revenue was 1.31 billion yuan (+ 16.3%), and the newly developed hypoglycemic products promoted the listing of customer preparation products in Europe. Among them, the income from hypoglycemic products was 260 million yuan (+ 57.7%); The income from anti infection was 450 million yuan (+ 20.2%); The growth rate of central nervous and non steroidal APIs was relatively slow, with a year-on-year increase of 0.3% and 5.8% respectively. In 20212021, the company was in the process of applying for sustained-release preparations from AEPA, and the products were put on the market in 17 months after the approval of NMDA; The marketing application of t2dm-02 sustained release tablets has been accepted by nmpa.
The construction in progress has increased rapidly, and the integration capacity of API and preparation has been completed. In 2021, the company’s projects under construction amounted to 470 million yuan (+ 57.1%). With the progress of the original planned new production capacity, the company successively acquired Taihua Hangzhou (100% equity) and Nanjing kangchuanji Pharmaceutical (51% equity), increased the production capacity of cdmo and API, improved the preparation business capacity, and constructed the integrated service capacity of intermediate API preparation with the help of the acquired target resources.
Profit forecast and rating. We expect that the EPS from 2022 to 2024 will be 1.08 yuan, 1.44 yuan and 1.87 yuan respectively, corresponding to the current stock price valuation of 43 times, 32 times and 25 times respectively, maintaining the “buy” rating.
Risk warning: sales are less than expected; Risk that the progress of products under development is less than expected.
