\u3000\u3 Shengda Resources Co.Ltd(000603) 259 Wuxi Apptec Co.Ltd(603259) )
Event summary
The company released the performance report for the first quarter of 2022: the operating revenue was 8.474 billion yuan, a year-on-year increase of 71.2%; 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 106.52%; 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%; The gross profit margin was 35.79%, down 1.31pp from the same period last year. We judged that it was mainly due to the depreciation of the exchange rate of Q1 US dollar against RMB and the rise in the price of bulk materials.
Key investment points
Performance growth exceeded expectations and profitability improved steadily
From the perspective of revenue, thanks to the company’s original crdmo ctdmo business model and the service strategy of “follow molecules – follow customers – follow science”, the revenue in 2022q1 increased by 71.18% year-on-year, and the quarter on quarter growth reached a new high, with a month on month growth rate of 32.8%. From the perspective of profit, the net profit attributable to the parent company in 2022q1 increased by 9.54% year-on-year, mainly due to the changes in the fair value of the company’s investment objects and credit impairment losses; As the growth rate of ifrs-5 business is expected to be higher than that of non-8% year-on-year, and the revenue growth of ifrs-5 business is expected to be higher in the future.
Capital expenditure continues its high growth trend, and the performance is expected to grow steadily during the epidemic
The company’s production capacity will enter the accelerated release period. From 2021 to 2022, the company will continue to increase capital expenditure, reaching 6.936 billion in 2021, a year-on-year increase of 129%; It is expected to be 9-10 billion yuan in 2022. With the continuous operation of production facilities in Taixing phase I, Changzhou phase III and Delaware, as well as R & D facilities in Nantong, Tianjin, Chengdu and Suzhou, the company’s industry leading competitive advantages are superimposed, which is expected to support the stable growth of the company’s performance. At present, Shanghai is in the state of epidemic control. The company realizes business linkage through sites around the world to ensure the continuity of service projects. If the epidemic is effectively controlled by the end of April, Q2 is expected to achieve 63-65% rapid growth, and the annual revenue target in 2022 is 65-70%.
Crdmo business model is gradually mature, and the synergy is significantly enhanced
The company continued to strengthen the crdmo integrated service mode, strengthened the diversion of front and rear end projects, and achieved a revenue of RMB 6.118 billion in 2022q1, with a year-on-year increase of 102.11%. Excluding covid-19 commercialization projects, the proportion of revenue increased by 52.3%. The revenue of the upstream small molecule drug discovery service segment was 1.745 billion yuan, with a year-on-year increase of 46.62%. A total of 90000 customized compounds were synthesized, opening a “flow inlet” for downstream businesses; The revenue of process R & D and production (D & M) segment was 4.373 billion yuan, with a year-on-year increase of 138.07%. Cdmo has served 1808 new drug molecules, including 42 listed commercial projects. The cdmo sector of new capabilities and technologies has a strong growth momentum. The number of oligonucleotide and polypeptide drugs customers and molecules reached 86, an increase of 72% year-on-year, and the number of service molecules reached 121, an increase of 98% year-on-year.
CGT ctdmo accumulates energy and improves the flexibility of business development
2022 may be the turning year of ctdmo business. The revenue of ctdmo segment of the company reached 299 million yuan in 2021, with a year-on-year increase of 36.99%; It covers 74 development and production service projects, including 7 clinical phase II projects and 8 clinical phase III projects. Tessa-aav technology platform realizes the de plasmid production process, using Tessa ™ The AAV produced by vector is 10 times higher than that produced by plasmid based method. As of Q1, there are 14 Tessa ™ Evaluate the project. With the gradual production of production capacity and the superposition of technological innovation breakthroughs, we expect that 2022 may be a turning year for ctdmo business, and the growth rate of the sector is expected to exceed that of the industry.
Profit forecast
Due to the continuous development of the company’s unique integrated crdmo and ctdmo business model and the rapid growth of the company’s performance, we expect the company’s operating revenue to be 38.580/46.361/58.498 billion yuan from 2022 to 2024; The net profit attributable to the parent company is RMB 8.029/99.05/12.756 billion (originally RMB 86.58/106.01/13.5 billion from 2022 to 2024); The corresponding EPS is 2.72/3.35/4.32 yuan / share, maintaining the buy rating.
Risk tips: the number and growth of orders are less than expected, the release of production capacity is less than expected, the impact of exchange rate fluctuations on performance, the risk of investment income fluctuations, the risk of core personnel loss, and the risk of goodwill impairment.
