\u3000\u3 Shengda Resources Co.Ltd(000603) 520 Zhejiang Starry Pharmaceutical Co.Ltd(603520) )
Key investment points
Event: the company released the 2021 annual report and the first quarterly report of 2022. In 2021, the operating revenue was 2 billion yuan, a year-on-year increase of 46.29%, the net profit attributable to the parent was 324 million yuan, a year-on-year increase of 35.61%, and the non net profit deducted was 308 million yuan, a year-on-year increase of 30.04%; In the first quarter of 2022, the operating revenue was 517 million yuan, with a year-on-year increase of 42.08%. The net profit attributable to the parent company was 802402 million yuan, with a year-on-year increase of 24.27%. The non net profit deducted was 731177 million yuan, with a year-on-year increase of 22.86%.
Revenue growth is strong, profits are expected to improve, and contrast agents and cdmo are in full force. In 2021, the company's revenue maintained strong growth, the loss of preparation business was reduced by 54%, and the growth rate of profit side was slower than that of revenue side, mainly due to the changes of product structure, rising costs, continuous investment in R & D and other factors. Quarter by quarter, the revenue of 21q4 was 689 million yuan (year-on-year + 114.95%, the same below), the net profit attributable to the parent was 104 million yuan (+ 158.84%), and the non net profit deducted was 83.58 million yuan (+ 94.78%); 22q1 revenue maintained strong growth, and the profit growth rate was lower than that of revenue, which was mainly affected by the disturbance of gross profit margin. With the joint efforts of contrast agent API, preparation and cdmo, the annual revenue is expected to continue to be strong and the profitability will continue to improve.
Sub business: API is growing steadily, preparations are starting to work, and cdmo is expected to become a new growth point. API: in 2021, the revenue was 1.524 billion yuan (+ 26.86%), with a steady growth. Preparation: iohexol injection and ioxadol injection won the bid of Shandong provincial centralized purchase and the fifth batch of national centralized purchase of drugs. The preparation business opened the first year of large-scale production, resulting in improved profits. At the same time, iohexol injection is expected to participate in the seventh batch of national centralized purchase. Cdmo: in 2021, the revenue was 45.02 million yuan (+ 1.31%), and the sales volume was 79.92 tons (- 15.57%), which was mainly due to the reduction of procurement by some customers affected by the epidemic. Cdmo is the company's key expansion sector. Relying on technology and customer resources, the company upgrades from R & D and BD and cultivates professional platforms, which is expected to become a new growth point in the future.
Subsidiaries: the performance of the parent company maintained rapid growth, and the preparation business began to make efforts. 1) Parent company: in 2021, the revenue was 1.291 billion yuan (+ 34.29%), the net profit was 304 million yuan (+ 62.38%), and the gross profit margin was 32.56% (- 4.85pp). 2) Shanghai Zhejiang Starry Pharmaceutical Co.Ltd(603520) : in 2021, the revenue was 219 million yuan, the net profit was - 34.05 million yuan, a year-on-year loss of 39.9 million yuan, and the preparation business began to develop. 3) Haishen pharmaceutical: in 2021, the revenue was 570 million yuan (+ 68.18%), the net profit was 102 million yuan (+ 64.46%), and the net interest rate was 17.87% (- 0.40pp). 4) Jiangxi Zhejiang Starry Pharmaceutical Co.Ltd(603520) : providing intermediates for the parent company and Poseidon and cdmo services for API and intermediates for customers. In 2021, the revenue was 641 million yuan (+ 29.40%), the net profit was 69.99 million yuan (+ 14.91%), and the net interest rate was 10.92% (- 1.38pp).
Expense rate: the gross profit margin fluctuates under the influence of cost and product structure, the expense rate decreases, and the R & D investment continues to increase. Gross profit margin: the gross profit margin in 2021 and 2022q1 is 37.40% (- 6.59pp) and 31.29% (- 12.96pp) respectively. The gross profit margin in 22q1 remains basically stable compared with 21q4. We expect that the annual gross profit margin is expected to recover gradually as the price rise gradually transmits to the downstream. Expense ratio: in 2021, the sales expense ratio is 0.98% (+ 0.27pp), the management expense ratio is 6.54% (- 3.73pp), and the financial expense ratio is 3.59% (- 1.47pp); In 2022q1, the sales expense rate is 1.14% (+ 0.36pp), the management expense rate is 6.79% (- 1.56pp), and the financial expense rate is 2.40% (- 5.06pp). The decrease of management expense rate is mainly due to the rapid growth of income, and the decrease of financial expense rate is due to the rapid growth of the company's income and the optimization of asset liability ratio. R & D expenses: in 2021, R & D expenses were 125 million yuan (+ 41.83%), accounting for 6.23% of revenue (- 0.20pp); In 2022q1, the R & D cost was 27.97 million yuan (+ 12.73%), accounting for 5.41% of the revenue (- 1.41pp). The company's R & D investment continued to grow, and the proportion remained stable.
Profit forecast and investment suggestions: according to the latest announcement, considering that the price of the company's products has increased due to the rise in the price of raw materials, the cost side is expected to remain under pressure, and the R & D investment continues to increase, we adjust the profit forecast. It is estimated that the company's revenue from 2022 to 2024 will be 2.560 billion yuan, 3.202 billion yuan and 4.015 billion yuan (2.347 billion yuan and 2.987 billion yuan before the adjustment in 2022 and 2023), with a year-on-year increase of 28.00%, 25.07% and 25.39%. The net profit attributable to the parent company was RMB 500 million, 679 million and 920 million (RMB 502 million and 706 million before the adjustment in 2022 and 2023), with a year-on-year increase of 54.48%, 35.68% and 35.57%. The current share price corresponds to 19 / 14 / 10 times of PE from 2022 to 2024. Considering that the company is in the contrast agent industry with rapid demand development and good competition pattern, superimposing its own capacity release and the sustained and rapid growth of preparation and cdmo harvest, the "buy" rating is maintained.
Risk warning event: environmental protection risk; Quality risk; Risk of order loss due to competition with customers; Risk of rising raw material prices; The progress of product approval is lower than the expected risk; There is a risk that the public information is delayed or not updated in time.
