\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event: on April 25, 2022, the company released the first quarterly report of 2022. In 2022, the company realized an operating revenue of RMB 8.474 billion, an increase of 71.2% year-on-year; The net profit attributable to the parent company was 1.643 billion yuan, a year-on-year increase of 9.5%; The net profit deducted from non parent company was 1.714 billion yuan, with 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%.
Revenue and non IFRS parent ownership continue to accelerate, and it is expected to achieve 65-70% revenue growth in the whole year. On a month on month basis, in 2022q1, revenue increased by 32.8%, 7.0% and 79.0% respectively; In terms of profitability, the gross profit margin of 2022q1 is 35.79% (year-on-year -1.31pp), the gross profit margin of non IFRS is 37.80% (- 1.30pp), the net profit margin attributable to parent company is 19.39% (- 10.91pp), and the net profit margin attributable to parent company of non IFRS is 24.22% (+ 1.91pp). We expect that the accelerated growth of revenue and deduction is mainly due to: ① the smooth implementation of crdmo strategy, strong order demand and continuous strong main business; ② The small molecule cdmo business model of “following and winning molecules” ushered in the harvest period, which was caused by the continuous release of new production capacity and commercial orders. At the same time, due to full orders and continuous release of production capacity, we expect that if the epidemic in Shanghai is basically controlled by the end of April, the company is expected to achieve 63-65% rapid growth in revenue in 2022q2 and 65-70% rapid growth in revenue in the whole year.
Wuxi chemistry: “end-to-end, integrated” crdmo business model continues to be fulfilled, and the growth is still strong after excluding covid-19 orders. In 2022q1, the revenue was 6.12 billion yuan (+ 102.1%). ① Small molecule drug discovery service (R): revenue of 1.74 billion yuan (+ 46.6%), laying the foundation for sustained high growth in the back end. ② Cdmo (process R & D and production): “follow and win molecules” is progressing smoothly, with a revenue of 4.37 billion yuan (+ 138.1%). By 2022q1, there are 1808 R & D pipeline projects (+ 34.1%), including 42 commercialization (+ 50%). In addition, excluding covid-19 commercialization projects, the chemical business has increased by 52.3%. Therefore, we expect that the revenue recognized by covid-19 in Q1 is about 1.51 billion yuan.
Wuxitesting: the safety assessment continues to grow rapidly, and the testing of medical devices has recovered steadily. In 2022q1, the revenue was 1.28 billion yuan (+ 31.7%), of which ① laboratory analysis and testing services: the revenue was 910 million yuan (+ 39.9%), the safety assessment business increased by 53% year-on-year, and the medical device testing business significantly recovered to a growth rate of 27%; ② Clinical cro and SMO: the revenue is 370 million yuan (+ 15.2%), the scale is expanding, and SMO has more than 4600 employees (+ 26%).
Biology business: new molecular types drive rapid growth. The income of biology and molecular medicine increased by 11.05% compared with that of Q1 + 2PP at the end of 2020 (accounting for 26.3% of the total income of biology and molecular medicine + 2PP).
Cell and gene therapy ctdmo (wuxiatu): it is expected to return to the track of rapid growth after the recovery of overseas epidemic. The revenue of 2022q1 is 300 million yuan (+ 37.0%), including about 74 Q1 service projects, of which 4 project offices are about to submit the listing application stage. In addition, Tessa technology with significant advantages of the company is currently serving 14 evaluation projects.
China new drug R & D Service Department (wuxiddsu): it is expected that the business will be in the iterative upgrading stage in 2022, and the revenue will decrease slightly. The revenue of 2022q1 was 240 million yuan (- 21.6%), Q1 helped customers complete the ind declaration of two innovative drug projects and obtained 16 clinical trial approvals.
Profit forecast and investment suggestions: considering the company’s full orders in 2022 and the continuous implementation of commercial projects, we expect the company’s revenue to be 36.817 billion yuan, 44.073 billion yuan and 54.283 billion yuan from 2022 to 2024, with a year-on-year increase of 60.75%, 19.71% and 23.17%, and the net profit attributable to the parent company to be 8.485 billion yuan, 9.891 billion yuan and 12.892 billion yuan, with a year-on-year increase of 66.46%, 16.57% and 30.34%. The company’s track is in a high boom, and the “integration, end-to-end” strategy is expected to consolidate competition barriers, drive the company’s long-term rapid growth and maintain the “buy” rating.
Risk warning events: the public data used in the research report may have the risk of information lag or untimely update, less than expected investment in new drug research and development, loss of core technicians, and exchange rate fluctuation.
