\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Key investment points
Event: in the first quarter of 2022, the company achieved an operating revenue of 1.443 billion yuan (+ 165.77%, which indicates the year-on-year growth rate in brackets, the same below); The net profit attributable to the parent company was 382 million yuan (+ 333.53%); Deduct 381 million yuan (+ 406.20%) of net profit not attributable to parent company; The net operating cash flow was 334 million yuan (+ 839.13%), and the performance exceeded expectations.
Q1 performance in 2022 exceeded expectations, and each business segment maintained strong growth: thanks to the gradual delivery of covid-19 small molecule major orders and continuous pipeline expansion disclosed by the company in February 2022, the company’s revenue scale in the first quarter of 2022 hit a record high in a single quarter, and the revenue contribution mainly came from the API cdmo business. The business revenue of this segment was 1.433 billion yuan, a year-on-year increase of 173%; The revenue of the two strategic new businesses increased rapidly, including the revenue of preparation cdmo business of 1.57 million yuan, a year-on-year increase of 969%; Cdmo business income of gene cell therapy was 7.85 million yuan, with a year-on-year increase of 953%. The core business will maintain the company’s future market, and the two strategic new businesses will bring new impetus to future performance growth.
The pipeline effect of funnel-shaped service products began to show, and there were sufficient orders on hand: in 2022, Q1 company signed 230 customers and 347 products (excluding J-star, an American subsidiary), with a year-on-year increase of 26%. 158 products were sold in the current period, with a year-on-year increase of 8%, including 98 clinical phase II and previous products, 18 clinical phase III products, and 42 new drug application and listing stages.
The expansion of team size and the gradual release of production capacity lay the foundation for the rapid growth of the company’s future performance: the total number of employees of Q1 company reached 4158 in 2022, an increase of 10% over the end of 2021 and 46% over the same period in 2021. Chongqing Changshou API cdmo production base with a capacity of 142.6m3 and Jiangxi Yichun production base with a capacity of 300m3 are under construction and are planned to be put into operation in 2023; The preparation production base of Chongqing Liangjiang New Area is 21978 square meters under construction, and it is planned to be completed and put into operation in Q4, 2022; The 16000 square meter industrialization base of Jiangsu Suzhou cell gene therapy phase II project is under construction, and it is planned to be completed and put into operation in Q4 in 2022. The company completed the acquisition of Kaihui pharmaceutical in March 2022. With further integration, it will further supplement the company’s R & D and capacity strength. The capacity release of the company’s three business segments accelerated, laying the foundation for the company’s rapid development in the future.
Profit forecast and investment rating: as the company’s Q1 performance in 2022 exceeded our expectations, compared with the previous forecast of net profit attributable to parent company of 1.345/1.452/1.774 billion yuan in 20222024, we predict that the net profit attributable to parent company in 20222024 will be 1.478/1.508/1.774 billion yuan, corresponding to 26.21/25.69/21.84 times of PE in 20222024. Maintain the “buy” rating.
Risk tip: environmental protection policy tightened; The cost transmission to the downstream is less than expected; The approval and volume of new products are less than expected; Cdmo business is less than expected; New business is not as expected; Exchange gain / loss risk.
