\u3000\u3000 Porton Pharma Solutions Ltd(300363) (300363)
Event: the company released the performance forecast for 2021, which is expected to achieve a revenue of RMB 3.004 billion ~ 3.108 billion (+ 45% ~ + 50% YoY), a net profit attributable to the parent of RMB 500 million ~ 532 million (+ 54% ~ + 64% YoY), and a deduction of non net profit of RMB 519 million ~ 548 million (+ 80% ~ + 90% YoY); Excluding the impact of new business loss of about 100 million yuan, the net profit attributable to the parent company is expected to increase by 64% – 72% year-on-year in 2021, and the net profit excluding non net profit is expected to increase by 87% – 96% year-on-year, with the performance exceeding the market expectation.
Q4 performance exceeded market expectations. In 2021q4, the company expects to achieve a revenue of 974 million yuan to 1078 million yuan (+ 67% ~ + 85% YoY), a net profit attributable to the parent company of 139 million yuan to 171 million yuan (+ 63% ~ + 101% YoY), and a deduction of non net profit of 166 million yuan to 195 million yuan (+ 142% ~ + 184% YoY), achieving high performance growth for 12 consecutive quarters, and the performance of a single quarter exceeded the market expectation. In terms of profitability, after excluding the impact of new business loss of 29 million yuan, the net interest rate deducted by 2021q4 company is about 20.02% ~ 20.78%. We expect it to be related to the high added value of large commercial orders and the improvement of CMC capacity and asset management efficiency of the company.
New production capacity is gradually released to ensure the continuous improvement of small molecule cdmo business. In the first three quarters of 2021, the company’s overall capacity utilization rate was 75% (+ 5pctyoy). Among them, the comprehensive utilization rate of 109 workshops officially put into operation in June reached 68% in the first three quarters, indicating that the company’s orders are full and the new capacity is climbing rapidly. As of the third quarterly report of 2021, the company has three small molecule API cdmo production bases of “Chongqing Changshou – Jiangxi DONGBANG – Hubei Yuyang”, with a total capacity of about 2000 cubic meters. As of January 5, 2022, the company is gradually transforming the workshop of Yuyang pharmaceutical as planned. Changshou 301 workshop and Jiangxi Boteng phase II project are also in normal progress. The performance elasticity brought by the release of new capacity is worth looking forward to.
The expansion of cdmo orders for gene cell therapy has accelerated, opening the company’s medium and long-term ceiling. The company’s preparation cdmo and cell gene therapy cdmo are still in the loss stage as a whole. Among them, the annual loss in 2021 was about 100 million yuan and the loss in the fourth quarter was about 29 million yuan. We expect that the company’s gene cell therapy cdmo will accelerate with the expansion of orders (in the first three quarters of 2021, the newly signed orders will be about 110 million yuan, and the cumulative orders on hand will be about 150 million yuan), the order execution and revenue will be gradually recognized, and the profit loss is expected to gradually narrow from 2022; In the first three quarters of 2021, the newly signed order amount of the company’s preparation cdmo business is about 32.16 million yuan. With the production of 2022q4 preparation workshop, the contribution of the company’s preparation cdmo revenue is expected to gradually increase from 2023.
Profit forecast, valuation and rating: considering the gradual delivery of USD 217 million large orders and the gradual narrowing of the losses of preparation cdmo and cell gene therapy cdmo, we raised the company’s net profit attributable to the parent company from 21 to 23 to RMB 515 / 853 / 1064 million (13.31% / 37.62% / 26.62% respectively compared with the previous forecast), with a year-on-year increase of 59% / 66% / 25% respectively, and the current price corresponds to 92 / 55 / 44 times of PE from 21 to 23, Maintain the “buy” rating.
Risk warning: the revenue of large orders is less than expected; The transformation progress from early cro projects to later ones is less than expected; Commercial CMO order fluctuation risk; The promotion speed of strategic new business is lower than expected.
