\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 63 Porton Pharma Solutions Ltd(300363) )
Event summary
On April 29, the company announced the first quarter report of 2022: the operating revenue was 1.443 billion yuan, a year-on-year increase of 165.77%; The net profit attributable to the parent company was 382 million yuan, a year-on-year increase of 333.53%; The net profit attributable to the parent company after deduction was 381 million yuan, a year-on-year increase of 406.20%; The gross profit margin was 48.94%, an increase of 8.55pp over the same period last year, and the profit growth exceeded the upper limit of performance forecast.
Key investment points
Performance growth exceeded expectations and profitability was significantly enhanced
Thanks to the gradual delivery of major orders in the cdmo sector of the company, the revenue of Q1 in 2022 was 1.443 billion yuan (+ 166%), the profit side grew faster than the revenue side, the net profit attributable to the parent company was 382 million yuan (+ 333.53%), and the gross profit margin and net profit margin reached 48.94% and 24.83%, increased by 8.55pp and 8.68pp respectively, both of which were the highest levels in recent years. The operating efficiency has been significantly improved. From 2021q1 to 2022q1, the turnover rate of fixed assets has increased from 0.40 to 0.83, and the turnover rate of total assets has increased from 0.12 to 0.20; In terms of the number of employees, Q1 company had 4158 employees in 2022, with a year-on-year increase of 46%.
Customers / projects continue to expand, and the prospect of new business areas is promising
API cdmo business is the core driving force for the improvement of the company’s overall performance. In 2022q1, the revenue was 1.433 billion yuan (+ 173%), accounting for 99.29% of the total revenue (+ 2.63pp), the number of employees was 3656 (+ 37.60%), accounting for 87.93%, and the number of signed customers and projects (excluding J-star) were 151 (+ 31.30%) and 291 (+ 13.67%) respectively. The preparation and cgtcdmo business is still in the period of capacity-building, with small revenue but strong development momentum. In 2022q1, the preparation cdmo business achieved a revenue of 1.57 million yuan (+ 969%), and the number of contracted customers and projects were 22 (+ 144%) and 30 (+ 200%) respectively; Cdmo business revenue of cell and gene therapy is 7.85 million yuan (+ 953%), with 22 signed customers (+ 214%) and 26 projects (+ 189%).
The continuous release of production capacity supports the rapid growth of performance
The rapid expansion of production capacity provides sufficient guarantee for the rapid growth of subsequent performance. In the small molecule cdmo sector, the company’s production capacity expanded to 2019m3 in 2021, with a year-on-year increase of about 65%, of which the production capacity of Yuyang 584m3 will continue to be released with the continuous transformation of workshops; Invest 260 million yuan to expand the cdmo capacity of Chongqing Changshou 301 workshop, with a planned reaction volume of 142.6 cubic meters, which is expected to be put into operation in March 2023; An investment of 420 million yuan will be invested to expand Jiangxi Yichun small molecule API base, with an estimated additional capacity of 300m3, which is expected to be put into operation by the end of 2023. Cgtcdmo sector, with the 16000 ㎡ industrialization platform in Suzhou Sangtian Island put into operation, will further enhance the development of gene therapy technology, analysis and testing and GMP production capacity. For the preparation cdmo sector, the phase I project of the preparation production base has completed the capping of the main project in November 2021. It is expected to be completed and put into operation in Q4 in 2022, so as to further open up the end-to-end cdmo service chain of “DS + DP”.
Profit forecast
We estimate that the company’s operating revenue from 2022 to 2024 will be 7.776/89.08/10.731 billion yuan; The net profit attributable to the parent company is 1.334/1.538/1.876 billion yuan; The corresponding EPS is 2.45/2.83/3.45 yuan / share, maintaining the buy rating.
Risk warning: the R & D Progress of the innovative drugs served is less than the expected risk; Risk of demand fluctuation in the end market of commercial projects; Investment risk of fixed assets; Exchange rate fluctuation risk; New business investment risk.
