\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 47 Hangzhou Tigermed Consulting Co.Ltd(300347) )
Key investment points
Event: on April 26, 2022, the company released the first quarterly report of 2022. In the first quarter of 2022, the company realized an operating revenue of 1.818 billion yuan, a year-on-year increase of 101.55%; The net profit attributable to the parent company was 518 million yuan, a year-on-year increase of 13.82%; Net profit deducted from non parent company was 378 million yuan, with a year-on-year increase of 65.31%.
The revenue exceeded expectations, the deduction non growth was strong, and the gross profit rate fluctuated slightly. ① The revenue and deduction growth rate reflecting the actual operation of the main business maintained a rapid growth under the high base of the same period last year: the revenue in 2022q1 increased by 101.55% year-on-year and the deduction growth was 65.31%. We expect that it is mainly due to the continuous release of new orders with continuous high growth (new orders in 2021 + 74.22% year-on-year); ② The slowdown in parent company growth is mainly due to the decrease in the income from changes in fair value: the income from changes in fair value in 2022q1 is about 125 million yuan (year-on-year – 71.44%); ③ Due to the increase in the handling fee of covid-19 project, the gross profit margin in 2022q1 decreased slightly: about 38.83% (-8.09pp) in 2022q1. Later, with the gradual delivery of covid-19 orders, the gross profit margin is expected to return to the historical average level.
Orders are expected to continue to grow rapidly and the management ability is continuously optimized. The net operating cash flow in 2022q1 was 303 million yuan, a year-on-year increase of 27.16%. It is mainly due to the increase of income and good collection. Due to the contract liabilities of RMB 836 million in 2022q1, with a year-on-year increase of 34.27%, we expect that the orders in hand and newly signed orders of 2022q1 company are expected to grow rapidly. In terms of expense rate, the sales expense was 38.51 million yuan (+ 21.72%), and the expense rate was 2.12%, a year-on-year decrease of 1.39pp. The management expense was 159 million yuan (+ 39.22%), and the expense rate was 8.75%, a year-on-year decrease of 3.91pp, mainly due to the steady increase in the amortization of equity incentive expenses of the company. The R & D expense was 56.99 million yuan (+ 21.33%), and the expense rate was 6.35%, with a year-on-year decrease of 2.08pp, mainly due to the significant increase in revenue.
Profit forecast and investment suggestions: considering the continuous high growth of the company’s orders and consolidating the certainty of performance, we expect the company’s operating revenue to be 7.040, 9.268 and 11.860 billion yuan from 2022 to 2024, with a year-on-year increase of 35.04%, 31.64% and 27.97%; The net profit attributable to the parent company was RMB 4.026 billion, RMB 5.069 billion and RMB 6.199 billion respectively, with a year-on-year increase of 40.08%, 25.89% and 22.30%. The company is the leader of clinical cro in China, with prominent competitive advantages. The industry has ushered in a golden period of development and maintained the “buy” rating.
Risk warning events: the public materials used in the research report may have the risk of information lag or untimely update; Risk of loss of core technical personnel; Risk of industry R & D investment falling short of expectations; The risk that overseas business integration does not meet expectations; The risk of intensified industry competition; Exchange rate fluctuation risk.
