\u3000\u3 Shengda Resources Co.Ltd(000603) 127 Joinn Laboratories (China) Co.Ltd(603127) )
The company released the first quarter report of 2022: during the reporting period, the operating revenue was 271 million yuan, a year-on-year increase of 34.82%; The net profit attributable to the parent company was 125 million yuan, a year-on-year increase of 34.27%; After non deduction, the net profit was 132 million yuan, an increase of 66.65% year-on-year.
The revenue and profit increased rapidly, and the order growth continued to shine: 1) during the reporting period, the company’s revenue continued to grow rapidly. We expect that it mainly came from the continuous and strong growth of drug preclinical research services. From the newly signed orders in the reporting period exceeded 1 billion, with a year-on-year increase of more than 65%, and the orders on hand increased to 3.6 billion yuan at the end of the reporting period, which further shows the continued high prosperity of the preclinical research service industry, Based on sufficient orders in hand and continuously improved capacity utilization, we expect the sector to maintain rapid growth throughout the year. 2) During the reporting period, the net profit attributable to the parent company increased by 34.27% year-on-year, maintaining the same trend as the revenue growth, which was mainly affected by the loss of 14.47 million yuan (0 yuan in the same period last year) caused by the change of Changchun Bcht Biotechnology Co(688276) valuation and the government subsidy of 2.58 million yuan (17.22 million yuan in the same period last year). 3) From the perspective of the year-on-year growth of 66.7% of the non net profit attributable to the parent deduction, it still remains higher than the revenue growth rate. If the unrealized income from changes in the fair value of biological assets and the impact of raised funds are excluded, the non net profit attributable to the parent deduction achieves a year-on-year growth of 253.4%, which is significantly higher than the revenue growth rate, the profitability is significantly improved, and the gross profit margin is 51.7% (down 0.1 percentage point year-on-year), We expect to be mainly affected by the overhead rate of 23.6% (a year-on-year decrease of 9.8 percentage points).
Continue to expand production and capacity circle and improve the growth ceiling: 1) according to the announcement, the company plans to acquire 100% equity of Weimei biology and 100% equity of Yingmao biology to strengthen the business capacity of upstream experimental models, which is expected to enhance the strategic reserve and cost control of key experimental models, reduce the supply side risk and further improve the comprehensive service capacity. 2) At the end of 2021, the number of employees increased to 2140 (a year-on-year increase of 44.3%), which is expected to rapidly undertake the new production capacity. 3) about 7500 square meters of feeding facilities in Suzhou have been put into operation before the end of 2021, and 1800 square meters of laboratory (P2) decoration construction has been completed. In addition, about 20000 square meters of new building area in Suzhou (mainly feeding facilities, with supporting new power center, it room and other auxiliary facilities) is expected to be put into use in the second half of 2022, It will further enhance the company’s business flux and provide guarantee for long-term business implementation and performance growth. 4) Jointly funded with Jiangsu Xiantong to build China’s leading drug release evaluation center in Wuxi, the interior decoration of the laboratory is being carried out, which will better meet China’s drug release R & D needs. 5) The construction of Guangzhou Zhaoyan Anping base was started in October 2021 to help the long-term development of the business. 6) Zhaoyan California invested about 6000 square meters of test facilities in the new decoration in 2021 to help the development of overseas business, and the shortage of facilities of overseas subsidiary biomere will be further alleviated.
Profit forecast and rating: we expect the net profit attributable to the parent company from 2022 to 2024 to be 738 million yuan, 936 million yuan and 1.19 billion yuan, with a year-on-year increase of 32.4%, 26.9% and 26.9%, corresponding to 47x, 37x and 29x PE. We are optimistic about the continuous growth of the company as a leader in the safety assessment field of cro industry and the rapid development of new business, and maintain the “buy” rating.
Risk tip: the epidemic affects business risks, the demand for new drug research and development decreases, the expansion of new business is less than expected, the industry competition intensifies, and the risk of raw material supply.
