\u3000\u3 Shengda Resources Co.Ltd(000603) 520 Zhejiang Starry Pharmaceutical Co.Ltd(603520) )
Financial performance: revenue side growth accelerated from 2021q4
The company released the 2021 annual report and the first quarterly report of 2022. The revenue in 2021 was 2 billion yuan, with a year-on-year increase of 46.3%; The net profit attributable to the parent company was 320 million yuan, a year-on-year increase of 35.6%; The net profit margin attributable to the parent company was 16.2%, a year-on-year decrease of 1.3pct. In terms of revenue in a single quarter, the revenue in 2021q4 was 690 million yuan, a year-on-year increase of 114.9%; In 2022q1, the revenue was 520 million yuan, a year-on-year increase of 42.1%. In terms of net profit in a single quarter, the net profit attributable to the parent company in 2021q4 was 100 million yuan, a year-on-year increase of 158.8%; The net profit attributable to the parent company in 2022q1 was RMB 80 million, with a year-on-year increase of 24.3%. We believe that the growth rate of revenue and net profit in 2021 and 2022q1 is in line with our expectations.
Growth capacity: release of API production capacity and new increment of preparation integration
In terms of business segments, in 2021, contrast agent series products contributed to the main revenue growth (revenue increased by 43.6% year-on-year in 2021, accounting for 87.2%). The new production capacity of API is gradually released: according to the company's annual report, "Jiangxi and Haishen raised and invested intermediate and API projects have completed the plant construction and entered the electromechanical installation and trial production stage". We expect that the raised and put into production capacity will be released in a centralized manner from 2022 to 2024. Considering the trial operation, changes in GMP certification and product registration in the plant, and the climbing time of capacity utilization, we expect that the total production capacity of iodine contrast agent API of the company is expected to reach 25 Jinzai Food Group Co.Ltd(003000) tons in 2022. As for the centralized purchase volume of the preparation business, we expect to win the bid for the fifth batch of national centralized purchase in 2021, and the volume of iohexol injection and ioxamol injection is expected to gradually increase from 2021q4 (Shanghai Zhejiang Starry Pharmaceutical Co.Ltd(603520) revenue of 220 million yuan in 2021). Looking forward to 20222024, we expect that the growth of preparation business revenue will come from: ① the market share of bid winning products of centralized procurement will increase: according to the statistics of wind sample hospitals, the market share of Zhejiang Starry Pharmaceutical Co.Ltd(603520) iohexol injection will be 4.3% and that of ioxamol injection will be 1.8% in 2021. We expect that with the company strengthening the construction of sales team and channel promotion, the market share of bid winning preparations purchased in bulk is expected to further increase; ② Potential increment of the seventh batch of centralized procurement: according to the company's annual report "iodophor injection has been included in the seventh batch of national centralized procurement, and the company will actively prepare the application of the seventh batch of national centralized procurement". Combined with the fact that only four manufacturers have passed the consistency evaluation, we pay attention to the company's performance in centralized procurement, the potential increment of API supply and the development of contrast agent API in overseas markets and important customers, We expect that the contrast agent business will continue to maintain a high growth rate from 2022 to 2024.
In terms of cdmo business, the contribution of revenue in 2021 is small (revenue in 2021 increased by 1.3% year-on-year, accounting for 2.3%), but combined with the company's annual report "CMO / cdmo business of APIs and intermediates has become the company's key business segment", we are optimistic about the new increment of C (d) Mo expansion of the company.
Profitability: after the scale effect and cdmo proportion increase, the net profit margin is expected to be stable
In terms of gross profit margin, the gross profit margin in 2021 was 37.4%, a year-on-year decrease of 15pct. We believe that the decrease in gross profit margin mainly comes from the change in the income structure of contrast agent business preparations and APIs. We estimate that the gross profit margin of preparation business is lower than that of APIs business. With the increase of the proportion of preparation business income, the overall gross profit margin of the company may decline. At the same time, considering the release of API compliant capacity, dilution of manufacturing costs and process optimization, the gross profit margin of API may increase, the hedging gross profit margin may decrease, and the comprehensive gross profit margin may also increase after the proportion of cdmo revenue increases. Looking forward to 20222024, we expect the gross profit margin to remain stable. In terms of expense rate, according to the announcement in October 2020, we expect that the equity incentive fee is expected to decrease significantly from 2022 to 2023, resulting in the decrease of management expense rate; The sales expense ratio may also increase slightly with the sales promotion of preparations. Comprehensively, we expect that the net profit margin will rise slightly from 2022 to 2024 with the improvement of the company's large-scale production and management capacity.
Viewpoint: in the window period of capacity release + integration, gradually open the ceiling
We believe that in 2022, the company is in the period of compliance capacity release and product customer expansion. Under the background of downstream application expansion, generic drug penetration and steady growth of industry demand, as the leader of contrast agent API with the largest capacity and the most complete product registration in China, the company's performance growth will gradually enter the fast lane; In addition, with the expansion of international customers and the deepening of industrial chain cooperation, we are optimistic that the growth ceiling will be continuously improved with the upgrading of the company's supply capacity.
Profit forecast and valuation
We expect the company's EPS to be 2.02, 2.67 and 3.36 yuan / share from 2022 to 2024 respectively, and the closing price on April 28, 2022 corresponds to 21 times PE in 2022. We believe that the company is the leader of contrast agent raw materials in China. During the period of centralized release of production capacity, forward integration and accelerated product customer expansion, the company's performance will maintain a high growth from 2022 to 2024; Under the background of expanding international customers and deepening industrial chain cooperation, with the upgrading of the company's supply capacity, we believe that the growth ceiling is expected to be improved and maintain the "overweight" rating.
Risk tips
Risk of production safety accidents, risk of sharp price reduction or standard deviation of centralized purchase of preparations, risk of sharp fluctuation of upstream costs, and risk of order delivery volatility.
