\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event: the company released the first quarter report of 2022. In 2022q1, the company achieved an operating revenue of 8.474 billion yuan, a year-on-year increase of + 71.18%; The net profit attributable to the parent company was 1.643 billion yuan, a year-on-year increase of + 9.54%; Deduct the net profit not attributable to the parent company of RMB 1.714 billion, a year-on-year increase of + 106.52%. The year-on-year growth rate of net profit attributable to the parent company was small, mainly due to the extraordinary profit and loss of 670 million yuan in the same period of the previous year, while the non recurring loss of 71 million yuan in the current period.
Non covid-19 chemical business, cell and gene therapy ctdmo business revenue grew rapidly. In terms of business, in 2022q1, the company’s chemical business achieved a revenue of 6.118 billion yuan, a year-on-year increase of + 102.11%. Excluding covid-19 commercialization project, the chemical business income was + 52.30% year-on-year; The number of D & M service customers and service molecules of oligonucleotide and polypeptide drugs were + 72.00% and + 98.00% year-on-year respectively, and the service revenue reached 251 million yuan. The company’s non covid-19 chemical business and new chemical molecular business are growing rapidly. The company achieved a year-on-year revenue of + 1.27 billion yuan. Among them, the revenue of laboratory analysis and testing services, clinical cro and SMO services were + 39.85% and + 15.21% year-on-year respectively. The company’s biological business achieved a revenue of 533 million yuan, a year-on-year increase of + 26.17%. Among them, targeted protein degradation, new nucleic acid molecules, new coupling molecules, carrier platforms, innovative drug delivery systems and other new molecular types and biopharmaceutical related revenue increased by + 110.00% year-on-year, accounting for 17.60% of biological business revenue, becoming an important driving force for the growth of biological business. The company’s cell and gene therapy ctdmo business achieved a revenue of 299 million yuan, a year-on-year increase of + 36.99%. The CGT projects of preclinical, phase 1, phase II and III clinical trials served by the company reached 59, 7 and 8 respectively. In March 2022, the company officially released tessatm technology platform with higher production efficiency. By the end of March 2022, the company had 14 tessatm evaluation projects. The company’s China new drug R & D Service Department achieved a revenue of 241 million yuan, a year-on-year increase of – 21.57%, mainly due to the active iterative upgrading of the business of China new drug R & D service department to meet the higher requirements of customers for China’s new drug R & D services.
Scale effect + improvement of operating efficiency, driving the improvement of the company’s profitability year-on-year. In 2022q1, affected by product structure and other factors, the company’s gross profit margin decreased by 1.31pct to 35.79% year-on-year; Affected by the scale effect and the improvement of operating efficiency, the company’s sales expense rate, management expense rate and financial expense rate were 2.04%, 10.42% and 0.12% respectively, with a year-on-year decrease of 1.16pct, 3.32pct and 0.53pct. The decrease of expense rate during the period of the company offset the adverse impact of the decline of gross profit margin on net profit, driving the improvement of the company’s deduction of non net profit margin year-on-year.
The company has sufficient orders on hand, and its performance is expected to maintain rapid growth in 2022. By the end of March 2022, the company’s contractual liabilities amounted to 3.296 billion yuan, a year-on-year increase of + 101.62%, an increase of 10.38% over the end of 2021, indicating that the company has sufficient orders on hand and a good growth in newly signed orders. Since the outbreak of Omicron epidemic in Shanghai at the end of March 2022, the company has timely and efficiently implemented the business continuity plan, gave full play to the advantages of global layout and whole industry chain coverage, and ensured the timely delivery of orders. If the epidemic situation in Shanghai is effectively controlled by the end of April, the company expects that the revenue of 2022q2 will achieve a rapid growth of 63.00% – 65.00%, and the annual revenue is expected to achieve a growth of 65.00% – 70.00%.
Profit forecast and investment suggestions: the company firmly implements the “follow the molecules” strategy, the project funnel effect and business synergy effect appear, the stock business and emerging business maintain a good development trend, and the company’s performance is expected to continue to maintain high-speed growth. From 2022 to 2024, it is estimated that the company will realize the profit attributable to parent company of RMB 8.621/94.29/11.627 billion, EPS of RMB 2.92/3.19/3.93 respectively, and PE corresponding to current stock price of 33.56/30.68/24.88 times respectively. Considering: (1) in the past three years, the compound growth rate of the company’s revenue and deduction of net profit not attributable to parent company of 33.55% and 37.62% respectively, the average and median of PE (TTM) are 86.90 and 90.00 times respectively; (2) In the next three years, the compound growth rate of the company’s performance is expected to reach 30% – 35%; (3) Benefiting from covid-19 commercialization project, the company’s performance will achieve rapid growth in 2022. Under the influence of high base, the company’s performance growth will slow down in 2023; Give the company 45-50 times PE in 2022, and the corresponding target price is 131.40-146.00 yuan / share, maintaining the company’s “recommended” rating.
Risk tips: covid-19 epidemic risk, increased industry competition risk, exchange rate change risk, Sino US trade friction risk, order growth less than expected risk, etc.
