\u3000\u30 Shenzhen Quanxinhao Co.Ltd(000007) 39 Apeloa Pharmaceutical Co.Ltd(000739) )
Core view
The three businesses are developing together, and the platform has significant advantages Apeloa Pharmaceutical Co.Ltd(000739) main businesses include API intermediates, cdmo and preparations. Focusing on the strategic goal of “refining raw materials, strengthening cdmo and making excellent preparations”, the company has coordinated the development of the three businesses and continued to build the core competitiveness of the enterprise. At present, the company is in a new round of capital investment cycle. With the new development concept of “strong scientific and technological R & D, high standard compliance and low-cost manufacturing”, the investment in R & D and manufacturing is further increased, and the investment in cdmo is particularly intensive. We believe that with the promotion of the new development concept, the company’s revenue volume and net interest rate are expected to be further improved. The industry’s high outlook continues, and the CAGR of China National Chemical Engineering Co.Ltd(601117) cdmo is expected to be about 28% in five years. With the continuous prosperity of the pharmaceutical industry and the improvement of outsourcing rate, the cdmo industry has developed rapidly. In 2020, the scale of China National Chemical Engineering Co.Ltd(601117) drug cdmo industry will reach 22.6 billion yuan, and the gagr is expected to reach 28% from 2020 to 2025.
Cdmo sector: orders in hand and the rhythm of capacity delivery lay the foundation for high growth in the next three years. The transformation and upgrading strategy of the company’s cdmo sector from “initial API + registered intermediate to registered intermediate + API” has achieved remarkable results: in 2022, the company signed an agreement with MPP and was authorized to copy Pfizer oral covid-19 drug (API + Preparation), and the manufacturing capacity continued to improve; In recent years, the layout of biosynthesis has been accelerated, with the technical ability of “chemical synthesis + biological fermentation” two wheel drive; By the end of 2021, the number of projects under construction was 709 million yuan (+ 347%), 879 R & D personnel (+ 65%), 323 ongoing projects, and 812 cdmo quotation projects (+ 50%) in the whole year. With the continuous implementation of high barrier production capacity, the number of projects of the company increased rapidly. API sector: cost reduction and efficiency increase, value chain expansion and approval of new varieties have laid the foundation for performance growth. On the one hand, the company has stepped up the construction of “four modernizations” in recent years, and there is great room for cost reduction and efficiency increase in the API sector. On the other hand, with the continuous compression of China’s environmental protection policies, as a leading API enterprise, the company is expected to continue to benefit from the expansion of the value chain brought by the improvement of industry concentration. In the short term, the API sector is under the dual pressure of the epidemic and the price rise of energy power. However, in the medium and long term, with the extension of the value chain and the approval of new varieties, we believe that the API sector will maintain steady growth.
Preparation sector: significant integration advantages, and centralized mining provides new kinetic energy. The company’s API preparation integration platform provides strong support for preparation development. In 2021, the company’s six API preparation integration products passed the consistency evaluation. With the bid winning of levofloxacin tablets and levetiracetam tablets and the subsequent intensive collection of new varieties, we believe that the development of preparation business is expected to enter a new cycle.
The growth rate of API’s double end business is expected to be 1.8 billion yuan / 2024, and the net profit of API’s double end business is expected to be 1.8 billion yuan / 2024, with a year-on-year growth rate of 1.8 billion yuan / 2024 and a year-on-year decrease of 1.5%, which is expected to be 1.8 billion yuan / 2024; The current share price corresponds to PE = 22 / 18 / 14x. With the continuous production of new production capacity and the gradual appearance of the benefits of R & D investment, the company is expected to usher in a new development stage, with a reasonable valuation of 27.3-30.8 billion yuan, 25% – 41% higher than the current stock price, and maintain “buy”.
Risk tips: repeated epidemic, downturn risk, geopolitical risk, safety and environmental protection policy risk
