\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
The net profit attributable to the parent company was RMB 1.671 billion, a year-on-year increase of RMB 10.65%, with a net profit attributable to the parent company of RMB 1.671 billion and a year-on-year increase of RMB 10.65%.
Since Q1 of 2018, the company’s sales have increased month on month for 15 consecutive quarters, and the growth rate in Q2 is expected to be 63-65%. 1) In 2022, Q1 company achieved a revenue of 8.47 billion yuan, with a year-on-year increase of 71.2% and a month on month increase of 32.8%. It achieved a month on month increase in sales for 17 consecutive quarters (except for covid-19 epidemic in the first quarter of 2020). After adjusting the non IFRS, the net profit attributable to the parent company increased by 85.8% year on year; 2) The year-on-year decline of the company’s Q1 gross profit margin was mainly affected by the exchange rate. Under the comparison of constant exchange rate, the 22q1 gross profit margin was 37.8%, with a year-on-year increase of 1.1 percentage points; 3) The company has implemented the business continuity plan in this round of epidemic, and the company’s business is limited. If the epidemic in Shanghai is controlled by the end of April, the company expects to continue to achieve a high growth rate of 63-65% in Q2 in 2022, and is expected to achieve a growth rate of 65-70% in the whole year.
The five sectors work together. The chemical sector provides the main growth rate, and the growth rate is still 52.3% after excluding covid-19: 1) chemical business: the revenue is 6.12 billion, with a year-on-year increase of 102.1%, including “R” business of 1.75 billion, with a year-on-year increase of 46.6%, D & M business of 4.37 billion, with a year-on-year increase of 138.1%, and the business chemical sector after excluding covid-19, with a year-on-year increase of 52.3%; 2) Testing business: the revenue was 1.28 billion, with a year-on-year increase of 31.7%, including 910 million laboratory services, with a year-on-year increase of 39.9%; 3) Biology business: the income was 530 million, with a year-on-year increase of 26.2%, of which the income related to new molecules increased by 110% year-on-year; 4) ATU sector: revenue of 300 million, with a year-on-year increase of 37%. Cell gene therapy sector provides long-term performance flexibility; 5) Ddsu: revenue was 240 million, down 21.6% year-on-year. Business iteration and renewal led to a decline in revenue. Q1 received 16 ind approvals.
The long tail strategy continues to bring incremental customers, with obvious synergy of the integrated platform and high customer loyalty. 1) The company adheres to the long tail strategy, and customer loyalty continues to increase: more than 320 new customers in Q1, a total of 5800 active customers, and the retention rate of the company’s top ten customers is 100%; 2) Improve the penetration rate of large pharmaceutical enterprises: Q1’s revenue from customers of the world’s top 20 pharmaceutical enterprises was 3.81 billion, a year-on-year increase of 140%; 3) The integrated platform helps customers transform: Q1’s revenue from customers using multi business department services was 7.39 billion, a year-on-year increase of 87%.
Follow and win molecular development, and the “service fee + milestone & revenue sharing” project continues to advance. 1) Small molecule crdmo pipeline: 217 molecules were added in Q1, with a total of 1808 molecules, 42 commercial projects and 49 clinical phase III projects; 2) Cell and gene therapy ctdmo: 59 preclinical and clinical phase I projects, 7 clinical phase II projects and 8 clinical phase III projects in hand; 3) The “service fee + milestone & revenue sharing” project continued to advance: Q1 declared 2 inds and 16 CTAs for customers, and 146 inds and 126 CTAs for customers in total.
Investment suggestion: as a leader in the pharmaceutical outsourcing industry, the company’s performance has repeatedly reached new highs by following the molecular and long tail strategy. It is expected that the company’s revenue in 22-24 years will reach 38.2/456/57 billion yuan, and the net profit attributable to the parent company in 22-24 years will reach 86 / 103 / 13 billion yuan. According to the current market value of 22 years, PE is about 34 times, maintaining the “buy” rating.
Risk warning: covid-19 epidemic intensifies the risk, order execution is less than expected, and international trade disputes aggravate the risk.
