\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event: Wuxi Apptec Co.Ltd(603259) released the first quarter report of 2022. 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%; The net profit deducted from non parent company was 1.714 billion yuan, with a year-on-year increase of 106.52%; After adjustment, the net profit of non IFRS was 2.053 billion yuan, a year-on-year increase of 24.23%; The net operating cash flow was -2.562 billion yuan.
Comments:
The profit margin has declined due to various influences. The gross profit margin of the parent company was -912pp.19%, with a year-on-year net profit margin of -912pp.19%. We believe that the investment loss and fair value loss have a great impact on the scale net profit, and the appreciation of RMB will affect the company’s comprehensive gross profit margin.
Crdmo has obvious diversion and high growth in chemical business capacity and performance. In 2022q1, the chemical business achieved a revenue of 6.118 billion yuan, a year-on-year increase of + 102.11%. Excluding covid-19 commercialization projects, the revenue was + 52.3% year-on-year, including drug discovery (R) revenue of 1.745 billion yuan, a year-on-year increase of + 46.62%; The income from process R & D and production (D & M) was 4.373 billion yuan, a year-on-year increase of + 138.07%. According to the strategy of “following molecules”, the diversion of crdmo funnel pipeline is obvious. There are 217 new molecules in Q1, with a total of 1808 serving molecules (42 commercialized, 49 in phase III, 271 in phase II, 1446 in phase I and preclinical). Oligonucleotide and polypeptide D & M services increased steadily. Q1 served 86 customers, with 121 molecules and a revenue of 251 million yuan. The effect of new molecular capacity-building was remarkable.
The testing business and biology business have developed steadily. In 2022q1, the revenue from testing business was 1.279 billion yuan, a year-on-year increase of + 31.70%, of which the revenue from laboratory analysis and testing was 909 million yuan, a year-on-year increase of + 39.85%; The revenue of clinical cro + SMO was 370 million yuan, a year-on-year increase of + 15.21%. 47 projects were signed on the integrated wind platform to further improve the utilization rate of internal resources. The biological business achieved a revenue of 533 million yuan, a year-on-year increase of + 26.17%, with more than 1100 del customers. The revenue related to new molecular types and biological drugs increased by + 110% year-on-year, accounting for 17.6% (2022q1) of the biological business from 14.6% (2021). In terms of technology development, the company has established three centers of excellence covering non alcoholic steatohepatitis, antiviral, neuroscience and geriatric diseases to provide continuous technical support.
Ctdmo diversion and Tessa technology drive the development of ATU business, and ddsu business is facing transformation and upgrading. In 2021q1, the revenue of ATU business was 299 million yuan, a year-on-year increase of + 36.99%; Ctdmo platform gradually plays a guiding role. 22q1 serves 74 projects (59 preclinical + phase I, 7 phase II, 4 phase III and 4 BLA); Tessa of heavyweight technology was released in March, and now there are 14 evaluation projects. Ddsu business is in the process of transformation and upgrading, and 22q1 achieved a revenue of 241 million yuan, a year-on-year increase of – 21.57%.
Profit forecast and investment rating: we expect the company’s operating revenue to be 38.220/44.719/56.992 billion yuan from 2022 to 2024, with a year-on-year increase of 66.9% / 17.0% / 27.4%; The net profit attributable to the parent company was 8.207/10.01/13.215 billion yuan respectively, with a year-on-year increase of 61.0% / 21.8% / 32.1%, corresponding to 35 / 29 / 22 times of PE from 2022 to 2024.
Risk factors: increased competition in the industry, decline in R & D investment and outsourcing demand in the pharmaceutical industry, China’s international policies, loss of core technicians and other risks.
