Heyuan Biology (688238)
The year-on-year net profit attributable to the parent company was RMB 1.028 million, with a year-on-year increase of RMB 1.028 million and a net profit attributable to the parent company of RMB 1.028 million, with a year-on-year increase of RMB 1.028 million.
The company’s revenue grew steadily, including nearly 70% growth rate of cdmo business and continuous expansion of production capacity. It is expected to maintain high-speed growth in the future. In 2022, Q1 company achieved an operating revenue of 73.116 million yuan, a year-on-year increase of 56.9%, and the net profit attributable to the parent company was 12.07 million yuan, a year-on-year increase of 28.8%. The revenue growth slightly exceeded the market expectation, including the company’s cro business revenue of 11.04 million yuan, a year-on-year increase of 13.9%, and cdmo business revenue of 60.943 million yuan, a year-on-year increase of 69.8%. At the same time, the company is building a precision medical industry base of nearly 80000 square meters in Shanghai Lingang Holdings Co.Ltd(600848) building 33 GMP production lines with a maximum reactor size of 2000L. The large-scale and highly flexible GMP production platform has built a solid system barrier for the company. It is expected that cdmo business will continue to contribute outstanding performance in the future.
Q1 implement option incentive and increase R & D investment. The growth rate of the company’s net profit in 22q1 was slightly lower than the growth rate of revenue, which was due to the higher expenses of the company in Q1. The total expenses during Q1 were 23.99 million yuan, an increase of 99.1% over the same period of last year, including: 1) the option incentive plan was implemented in April 2021, and the share payment of 4.688 million yuan was confirmed in the first quarter of 2022; 2) The company increased R & D investment, and the R & D expense in the first quarter was 7.097 million yuan, an increase of 156.4% over the same period last year.
Crdmo is a pioneer in integrated gene therapy, and the golden track can be expected in the future. The gene therapy market has entered the fast development Lane: gene therapy is favored by the capital market and supported by a number of national policies, and the scale of financing and M & A has increased rapidly. The gene therapy industry is highly dependent on cro / cdmo outsourcing services: the research and development and production of gene therapy products are difficult, long cycle and high cost, and most participants are start-ups, so they rely more on professional R & D and production outsourcing services. The growth rate of China’s cdmo industry is significantly higher than the global average: according to frost Sullivan data, the scale of China’s gene therapy cdmo market is expected to grow from 870 million yuan to 3.26 billion yuan from 2018 to 2022, with a compound annual growth rate of 39.3%. The company is a pioneer in the industry, and some of its technical level is comparable to that of the international: the company is a pioneer in the gene therapy outsourcing industry, forming two core technology clusters: gene therapy vector development technology and gene therapy vector production process and quality control technology, and some technologies are at the international leading level.
Investment suggestion: considering the company’s first mover advantage in the field of gene therapy outsourcing, the company will fully benefit from the first mover advantage, advanced technology group and high viscosity customer group. We expect the company’s performance in 20222024 to be RMB 0.8/1.3/200 million respectively, maintaining the “buy” rating.
Risk tip: the development of gene therapy industry is not as expected, the risks related to port industrial base and the risk of uncertain technical path
