\u3000\u3000 Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) (603456)
Event overview
The company released the performance forecast of 2021 annual report: it is expected to realize the net profit attributable to the parent company in 2021 of 609 ~ 685 million yuan, with a year-on-year increase of 60.00% ~ 80.00%; Deduct the non net profit of RMB 531 ~ 596 million, with a year-on-year increase of 65.00% ~ 85.00%.
Analysis and judgment:
The performance continues the trend of rapid growth, and the cdmo business continues to grow at a high speed
In 2021, the company realized a net profit attributable to the parent company of 609 ~ 685 million yuan, with a year-on-year increase of 60.00% ~ 80.00%, continuing the trend of rapid growth. In 2021, the company continued to cultivate cdmo business, broaden the number of customers and product pipelines, and realized the sustained and rapid development of cdmo business. Looking forward to the future, the company continues to expand the development of major customers such as Novartis, Roche, Geely, shuotang and a series of small customers at home and abroad, superimposing self built and acquired Teva Hangzhou plant, which is expected to continue to achieve rapid growth in the next 3 ~ 5 years.
Quasi first-line cdmo enterprises in strategic transformation accelerate the building of Ruibo cdmo brand and build nests to attract Phoenix
The company established Zhejiang Ruibo in 2008 and officially began to provide cdmo business to pharmaceutical enterprises. In 2019, the company acquired Suzhou Novartis to accelerate the strategic transformation of cdmo business and become a quasi first-line cdmo business in China. In recent years, the company has continued to strengthen the layout of R & D capacity through the acquisition of American R & D centers, the construction of Hangzhou and Taizhou, the establishment of cdmo business service platform (Ruibo Life Science) and the acquisition of Teva Hangzhou factory meeting GMP standards, so as to accelerate the building of Ruibo cdmo brand and build a nest to attract Phoenix. In 2020, the company’s cdmo business achieved an operating revenue of 1.29 billion yuan, a year-on-year increase of 70.8%, accounting for 48.9% of the overall revenue. In the first half of 2021, the company achieved a revenue of 1.02 billion yuan, a year-on-year increase of 134.8%, accounting for 54.8% of the overall revenue. The cdmo business accounted for more than 50% of the revenue for the first time, which also shows the success of the company’s strategic transformation. Considering that Novartis key customers will continue to contribute to the company’s core performance increment in the next 2-3 years and the performance increment brought by the continuous growth of core pipelines of other customers, we judge that the company’s cdmo business will continue to show a trend of rapid growth in the future.
Investment advice
As a quasi first-line cdmo enterprise in strategic transformation, the company has accelerated the building of Ruibo cdmo brand and built a nest to attract Phoenix. In addition, the characteristic API business has maintained steady growth under the background of stricter environmental protection policies in China. Maintain the early profit forecast, i.e. the annual revenue from 21 to 23 is RMB 4.022/5.289/6.809 billion respectively, EPS is RMB 0.80/1.05/1.41 respectively, corresponding to the closing price of RMB 51.38/share on January 18, 2022, and PE is 64.60/48.89/36.35 times respectively, maintaining the “buy” rating.
Risk tips
The core technology backbone and management risk of loss, the risk of intensified competition, the loss of core technical personnel, the risk of exchange rate fluctuations, and the expansion of New Coronavirus’s epidemic affecting China’s external business.
