\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 25 Pharmablock Sciences (Nanjing) Inc(300725) )
Matters:
\u3000\u30001. The company released the annual report of 2021: the annual revenue was 1.202 billion yuan (+ 17.55%), the attributable net profit was 487 million yuan (+ 164.14%), and the attributable net profit after deduction was 233 million yuan (+ 34.24%). It is near the median value previously predicted. Dividend plan: 1.00 yuan (including tax) for every 10 shares.
\u3000\u30002. The company released the first quarterly report of 2022: Q1 achieved a revenue of 336 million yuan (+ 17.44%), a net profit of 708398 million yuan (+ 1.53%), and a net profit of 652317 billion yuan (+ 0.88%) after deduction. Meet expectations.
Ping An View:
Rapid growth was achieved throughout the year, and the centralized increase of expenses affected the performance of short-term profits
The company achieved revenue of 1.202 billion yuan (+ 17.55%) in the whole year. If the exchange rate disturbance is excluded, the annual revenue will increase by 22.22%. Among them, the revenue of businesses below the kilogram level was 246 million yuan (+ 27.22%), and the revenue of businesses above the kilogram level was 893 million yuan (+ 11.02%). Except for a single large order, the revenue of other projects was + 52.24% (same exchange rate caliber + 56.81%), indicating that the company’s cdmo business pipeline is gradually taking shape.
The company had no new capacity in the first three quarters, and the raised investment laboratory was opened in 2021q4, but it had not contributed revenue during the reporting period. On this premise, Q4 achieved a revenue of 299 million yuan, with a slight increase year-on-year and month on month. The gross profit margin in a single quarter is 44.48% (-1.04pct). Considering the financial adjustment of transportation expenses in the whole year, the actual gross profit margin is estimated to be little different from that in the same period of last year. Q4 company’s expense rate increased significantly, including the one-time accrual of Huishi year-end bonus (the medicine stone body is accrued quarterly), exchange loss and depreciation of some new laboratories, which had a certain negative impact on the profit margin.
In 2022q1, the company achieved a revenue of 336 million yuan (+ 17.44%, excluding exchange rate disturbance (+ 19.58%), showing a good growth trend. The gross profit margin still increased slightly year-on-year (47.64%, + 0.18pct) after the transfer in of transportation expenses. The total cost rate of sales, management and R & D was 23.01%, compared with -4.66pct in the same period of last year. However, affected by the financial expenses and impairment losses caused by exchange losses, the profit growth rate of the current period is lower than that of income.
Cdmo is taking shape and the production workshop is gradually put into use
The company’s molecular block business continues to develop steadily, while the newly involved cdmo business is in the construction period of pipeline, technology and production capacity. In terms of pipeline, the company initially established a “project funnel” in 2021. During the year, it undertook 1430 pre clinical to clinical phase 2 projects and 45 clinical phase 3 to commercial projects, most of which were concentrated in the front end. Over time, the funnel distribution of the project will become closer to the mature cdmo company. It is worth mentioning that under the high starting point strategy, the company won 40 API projects (15 from European and American customers) and 3 DS / DP integration projects in the whole year, and has many high value-added projects in the initial stage. In terms of technology, the company strengthened the ability required for project amplification, and enhanced the ability of crystallization, pre Prescription Research and preparation development.
In terms of production capacity, the company overcame the impact of the epidemic and realized the opening of workshop 501 in March 2022. Workshop 502 will also be delivered in the second half of the year. With the subsequent implementation of workshop 503, the company’s production capacity shortage will be significantly alleviated.
The impact of a single order is an industry characteristic, and the fluctuation improves with the maturity of the company’s system
The company has been affected by a single order for many times in the past few years, and its quarterly performance fluctuated greatly. We believe that this situation belongs to the characteristics of the industry and is an inevitable way to move from cro or block business with large orders and small scale to cdmo large-scale production and supply. Investors need to give the company some patience in this process. When the company’s cdmo system becomes mature and the “project funnel” structure is improved, the impact of a single order will be significantly improved.
Maintain a “recommended” rating. The company is in the business development stage, with large early investment and later harvest. In 2022, the company’s cdmo business will further grow, and the continuous implementation of production capacity can alleviate the shortage of supply. As the cdmo pipeline matures and the drug discovery sector enters the cashing period, the company’s performance will accelerate. According to the implementation progress of the company’s production capacity, adjust and add the profit forecast for 2024. It is estimated that the EPS from 2022 to 2024 will be 1.88, 2.70 and 3.82 yuan (formerly 2.01 and 2.76 yuan from 2022 to 2023). Maintain a “recommended” rating.
Risk tips: 1) the predictability of the company’s business is relatively weak. If the actual business rhythm is quite different from the company’s prediction, there may be a mismatch between production capacity and demand; 2) If the effect of business expansion is less than expected, it may affect the development of the company; 3) If the customer does not renew the product due to price factors, the performance of the company may be affected; 4) If the management concepts and methods of the management cannot be switched in time with the development stage of the company, the development of the company may be affected.
