\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event overview
The company announced that the first quarterly report of 2022: the operating revenue was 8.474 billion yuan, a year-on-year increase of 71.18%; The adjusted net profit of non IFRS was 2.053 billion yuan, a year-on-year increase of 85.82%; The net profit attributable to the parent company was 1.643 billion yuan, a year-on-year increase of 9.54%; The non net profit deducted was 1.714 billion yuan, a year-on-year increase of 106.52%.
Analysis and judgment:
Laboratory business and cdmo business continued to maintain rapid growth, and cgtcdmo business resumed high growth
In 2022, Q1 achieved an operating revenue of RMB 8.474 billion, with a year-on-year increase of 71.18%. After adjustment, the net profit of non IFRS was RMB 2.053 billion, with a year-on-year increase of 85.82%. It continued the trend of rapid growth and its performance was in line with market expectations. At the end of the first quarter of 2022, there was an outbreak of Omicron epidemic in Shanghai. The company implemented the business continuity plan in a timely and efficient manner. If the epidemic in Shanghai is effectively controlled by the end of April, it is expected that the company’s annual operating revenue in Q2 and 2022 will continue to grow at a high speed of 63% ~ 65% and 65% ~ 70% respectively. Considering China’s bottom dividend (Engineer dividend and production cost advantage) and the current low proportion of China’s CXO supply chain in the world, we still maintain the previous judgment that the CXO industry will continue to grow rapidly in the next 3-5 years. As a global CXO leading enterprise rooted in China, Wuxi Apptec Co.Ltd(603259) will continue to benefit from the high growth brought by the industry dividend.
(1) cdmo business continues to maintain high growth and contribute to the growth elasticity of performance: the number of new molecules in 22q1 cdmo business is 217, reaching 1808 in total, including 42 commercialization, 49 clinical phase III, 271 clinical phase II, 1446 clinical phase I and preclinical, which continues to highlight the core advantages of crdmo integration of the company. 22q1cmo business realized a revenue of 4.37 billion yuan, a year-on-year increase of 138.1%, of which covid-19 commercial business contributed 1.508 billion yuan and conventional business income was 2.865 billion yuan, a year-on-year increase of 55.98%. It continues to show a trend of rapid growth and contribute core performance flexibility to the company.
(2) the laboratory business as a whole maintained high-speed growth and continued high-speed growth: 22q1 laboratory business realized an operating revenue of 3.427 billion yuan, with a year-on-year increase of 33.40%, including drug discovery business revenue of 1.745 billion yuan (YoY + 46.62%), laboratory analysis and testing business revenue of 909 million yuan (yoy + 39.85%), biology business revenue of 533 million yuan (YoY + 26.17%), ddsu business revenue of 241 million yuan (yoy-21.57%), The laboratory business continues to grow rapidly as a whole.
(3) cgtcdmo business resumed rapid growth: 22q1 cgtcdmo realized an operating revenue of 299 million yuan, a year-on-year increase of 36.99%, and resumed the trend of rapid growth. In March 2022, the company officially released Tessa ™ Technology, continue to build the company’s core technology platform and pipeline (59 preclinical and clinical phase I, 7 clinical phase II and 8 clinical phase III). Looking forward to the next few years, the company is expected to benefit from the high global outlook and show rapid growth.
(4) the growth rate of clinical cro business slowed down: 22q1 clinical cro and SMO business realized revenue of 370 million yuan, with a year-on-year increase of 15.21%, and the performance growth slowed down slightly. Investment advice
As a “big and strong” platform innovative drug service provider, the company has global business competitiveness, and the management team with Li Ge as the leadership core has the foresight of business layout and the ability to expand business. We judge that the company is a rare target with medium and long-term growth of a shares. Considering the rhythm of order confirmation, slightly adjust the early-stage profit forecast, that is, the revenue in 22-24 years is adjusted from 38.571/46.392/58.483 billion yuan to 38.883/46.737/58.492 billion yuan, and the EPS is adjusted from 2.92/3.68/4.58 yuan to 2.94/3.71/4.58 yuan, corresponding to the closing price of 97.87 yuan / share on April 25, 2022. The PE score is 33.25/26.38/21.37 times, maintaining the “buy” rating.
Risk tips
The risk of loss of core technical backbone and management, the risk of intensified competition, the risk of failure of growth strategy and business expansion, the risk of loss of core customers, the risk of exchange rate fluctuations, the risk of drug price reduction in the U.S. market, and the novel coronavirus epidemic affect the expansion of business outside China.
