\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
The company released the first quarter report of 2022. During the reporting period, the operating revenue was 8.474 billion yuan, a year-on-year increase of 71.2%; The net profit attributable to the parent company was 1.643 billion yuan, a year-on-year increase of 9.54%; The net profit after non deduction from the parent company was 1.714 billion yuan, a year-on-year increase of 106.5%; After adjustment, the net profit attributable to the parent company of non IFRS was RMB 2.053 billion, with a year-on-year increase of 85.8%.
The revenue performance is in line with expectations, and the growth of main business is strong. 2022q1 revenue + 32.8% month on month, maintaining quarter on quarter growth; If the constant exchange rate is adopted, the revenue is + 78.5% year-on-year, and the main business growth is strong under the strong demand for orders. Among them, the revenue of chemical business is 6.12 billion yuan (year-on-year + 102.1%, excluding covid-19 commercialization projects, it is + 52.3% year-on-year). Covid-19 contributes to the explosive increase, while the growth of conventional services continues to be strong. It is expected to double the revenue of the sector in 2022; The revenue from testing business was 1.28 billion yuan (year-on-year + 31.7%), of which the laboratory analysis and testing maintained a rapid growth (year-on-year + 39.9%); The biological business revenue was 532 million yuan (year-on-year + 26.7%), and the new molecular business became a new important driving force (revenue + 110% year-on-year, and the proportion of the sector increased to 17.6%); ATU’s business revenue was 298 million yuan (year-on-year + 37.0%), and its integrated testing, process development and production service capacity continued to improve. Four projects are in the stage of submitting listing applications, and the annual target growth rate is faster than that of the industry; Ddsu’s business revenue is 240 million yuan (year-on-year – 21.6%), which will continue to be upgraded iteratively to meet the higher demand of customers for new drug R & D services. It is expected to realize the sales share and increase the profit after the products in the pipeline are listed one after another.
After adjustment, the profit increased rapidly and the profitability continued to improve. In 2022q1, while the company’s revenue increased strongly, the company realized the continuous improvement of capacity utilization under the continuous optimization of operating efficiency, and the scale effect was further reflected. After adjustment, the net profit attributable to parent company of non IFRS achieved a year-on-year increase of + 85.8%, maintaining a rapid growth trend and significantly higher than the growth rate of revenue. At the same time, if the constant exchange rate is adopted, the adjusted non IFRS gross profit margin of 2022q1 company is 37.8% (year-on-year + 1.1 percentage points), and the profitability continues to improve.
We should actively respond to the impact of the epidemic and expect high growth in 2022. According to the announcement, after the outbreak of Omicron epidemic in Shanghai at the end of the first quarter, the company implemented the business continuity plan in a timely and efficient manner to ensure the continuous operation of all bases of the company and the health and safety of employees. The company has effectively brought into play the advantages of global layout and the coverage of the whole industrial chain, and linked all regions to jointly ensure business continuity. If the epidemic situation in Shanghai is effectively controlled by the end of April, the company expects to achieve a high-speed growth of 63-65% in the second quarter of 2022, and the company is also confident to achieve the goal of revenue growth of 65-70% in 2022.
Profit forecast and rating: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 8.37 billion yuan, 10.55 billion yuan and 13.83 billion yuan respectively, with a year-on-year increase of 64.1%, 26.1% and 31.0%; The corresponding PE is 35x, 27x and 21x respectively. We are optimistic that the company, as the leader of new drug R & D and production outsourcing services, will continue to grow and maintain the “buy” rating.
Risk warning: the epidemic affects the business risk, the risk that the order execution is less than expected, the risk of declining demand for pharmaceutical research and development, the risk of aggravating international trade disputes, and the risk of exchange rate changes
