\u3000\u3000 Wuxi Apptec Co.Ltd(603259) (603259)
The income met our expectations and the net profit attributable to the parent company exceeded our expectations
In 2021, the company realized revenue of 22.819-22.901 billion (yoy38% – 38.5%), net profit attributable to the parent of 4.973-5.031 billion (yoy68% – 70%), deduction of non-4.007-4.055 billion (yoy68% – 70%), 21q4 realized revenue of 6.298-6.38 billion (yoy33.4% – 35.1%), net profit attributable to the parent of 1.411-1.469 billion (yoy138% – 148%), deduction of non-901-949 million (yoy23.26% – 29.82%).
The revenue side of 2021q4 meets our expectations, and the net profit attributable to the parent company exceeds our profit forecast, The higher than expected net profit attributable to the parent is mainly due to the higher than expected net profit attributable to Q4 non recurring profit and loss of 510-520 million (it is expected that the main contribution comes from Q4’s net income from the disposal of ADC business of 274 million and the decrease in the fair value loss of derivative financial instruments of H-share convertible bonds caused by the decline of Q4 Hong Kong stock price).
The number of non covid-19 commercialization in 21q4 exceeded expectations and is optimistic about the high growth of overall income in 22-25 years
From 2019 to 2021, the small molecule cdmo business continues to exceed expectations, and under the accelerated realization of funnel effect, it is optimistic that the small molecule cdmo business revenue will continue to grow at a high rate from 2022 to 2023. By the end of 2021, the number of commercialized small molecule cdmo projects increased by 14 (yoy100%) compared with the end of 2020, all of which are phase III diversion projects, demonstrating the strong cashing capacity of funnel effect. From the quarter on quarter increase, five commercial projects were added in 2021q3 and 2021q4. Considering the order execution cycle of commercial projects, it means that the high growth of small molecule cdmo business from 2022 to 2023 is sustainable.
The inflection point of ATU business is gradually emerging, which is a high growth elastic business of the company from 2022 to 2023. As of 2021q4, the company has 53 preclinical / phase I, 8 clinical phase II and 11 clinical phase III projects, of which 4 are in the stage of submitting listing application, which means that the company is expected to usher in commercial cgtcdmo projects from 2022 to 2023, so as to drive the company’s ATU business to achieve high-speed growth. We speculate that the company’s ATU business is expected to achieve breakeven near 2023 and become a major driving factor driving the company’s overall performance growth from 2023 to 2025. We are optimistic about the sustainability of the company’s overall high income growth from 2022 to 2025.
Profit forecast and valuation
Considering that the net profit attributable to the parent company in 2021q4 exceeded our previous expectations, we raised our performance expectations for 2021. We expect the company’s EPS to be 1.69, 2.27 and 3.00 yuan / share from 2021 to 2023. The closing price on January 18, 2022 corresponds to 52 times of PE in 2022 (39 times of PE in 2023). We expect that the adjusted non IFRS net profit attributable to the parent company of the company is expected to reach 5.2 billion in 2021, corresponding to 66 times of the PE of the company’s main business in 2021, which is still in a relatively undervalued position and maintains the “buy” rating.
Risk tips
Risk of declining prosperity of global innovative drug R & D investment; Business decline risk caused by poor international expansion; Each competitive risk; Exchange risk; Uncertainty risk caused by fair value fluctuation
