Porton Pharma Solutions Ltd(300363) event comments: the high growth of cdmo business boosted the performance beyond expectations

\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )

The company released its quarterly report 2022. In the first quarter of 2022, the company achieved total operating revenue and net profit attributable to the parent company of 1.443 billion yuan and 382 million yuan respectively, with a year-on-year increase of 165.77% and 333.53% respectively; The non net profit deducted was 381 million yuan, a year-on-year increase of 406.2%. The growth rate of net profit exceeded the previous forecast of the company.

Comments:

The high performance growth is mainly due to the high growth of cdmo business. In the first quarter of 2022, with the gradual delivery of major orders received in the early stage of the company’s API cdmo business and continuous pipeline expansion, the business realized an operating revenue of 1.433 billion yuan, a year-on-year increase of 173%; The cdmo business of preparation achieved an operating revenue of 1.57 million yuan, a year-on-year increase of 969%; The cdmo business of gene cell therapy achieved an operating revenue of 7.85 million yuan, a year-on-year increase of 953%.

Continue to expand the market. In the first quarter of 2022, the company has signed 230 single customers (de duplication statistics of the same customers in different systems). 347 signed orders (excluding J-star), with a year-on-year increase of 26%, of which 158 products were sold in the current period, with a year-on-year increase of 8%. The distribution of products sold in the current period according to clinical stages is as follows: 98 in clinical phase II and before, 18 in clinical phase III, and 42 in new drug application and marketing stage.

Continuously improve service capacity. By the end of the first quarter of 2022, the total number of employees of the company had reached 4158, an increase of 10% over the end of 2021 and 46% over the same period last year. Among them, the total number of employees in API cdmo business was 3656, an increase of 10% over the end of 2021 and 38% over the same period last year; The total number of employees in gene cell therapy cdmo business reached 324, an increase of 10% over the end of 2021 and 172% over the same period last year; The total number of employees in the preparation cdmo business reached 178, an increase of 14% over the end of 2021 and 158% over the same period last year.

It is proposed to implement the restricted stock incentive plan. The company plans to grant 7.14 million restricted shares to a total of 212 people, including directors, supervisors, senior executives and core backbones, including 5.712 million shares for the first time at a price of 41.5 yuan / share. The performance assessment requirements are: Based on the net profit in 2020, the net profit growth rate from 2022 to 2024 shall not be less than 190%, 220% and 260% respectively. This incentive plan covers a wide range and has high performance assessment requirements, which is conducive to mobilizing the enthusiasm of core employees and helping the growth of the company.

Maintain recommended ratings. The company continues to improve its technical level and expand its production capacity, and its future growth can be expected. It is estimated that the company’s earnings per share from 2022 to 2023 will be 2.47 yuan and 2.76 yuan respectively, and the corresponding PE of the current stock price will be 29 times and 26 times respectively, maintaining the “recommended” rating.

Risk tips: intensified industry competition, sharp fluctuation of exchange rate, brain drain, industry policy risk, etc.

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