2021 and 1Q22 performance meet market expectations
The company announced its 2021 and 1Q22 results: in 2021, the company achieved revenue of 2 billion yuan, + 46.3% compared with the same period last year, and net profit of 320 million yuan, + 35.6% compared with the same period last year, in line with market expectations. 1Q22, the company achieved revenue of 520 million yuan, + 42.1% year-on-year; net profit of 80.24 million yuan, + 24.3% year-on-year, in line with market expectations.
Trend of development
The business of iodine contrast agent is growing steadily. In 2021, the company's contrast agent series achieved an income of 1.74 billion yuan (+ 43.6% YOY), mainly due to: 1) the steady growth of sales of raw materials for contrast media; 2) the volume of iohexol injection and iohexanol injection after winning the bid. In 2021, Shanghai Si Tai Li achieved an income of 219 million yuan and a net profit of-34 million yuan. We believe that Shanghai Si Tai Li is expected to turn a loss into a profit this year.
1Q21/2Q21/3Q21/4Q21/1Q22, the company's gross profit margin is 44.3%, 41.6%, 35.3%, 32.3%, 32.2%, 31.3%, respectively. The decline in profit margin is mainly due to the increase in the price of raw materials represented by iodine. We expect that in the future, as some of the company's long orders are converted into short orders, the company's cost transfer capacity is expected to increase gradually.
The core competitiveness of iodine contrast agent is increasing. According to the company's annual report, in 2021, the company invested 130 million yuan in R & D, of which 100 million yuan was invested in API, mainly to study and control impurities in existing products, improve and optimize process quality and increase innovation in iodine recovery process. We believe that with its deep investment in iodine contrast agent, the company is expected to continue to consolidate its leading position in the industry.
The preparation entered the dosage stage and the layout of CDMO was accelerated. Shanghai Si Tai Li project progress of 92%, the company iohexol and iodoxanol two major products into the collection and opening volume last year. The company plans to continue to complete the R & D and registration of iofol injection, iomeprol injection, gadolinium meglumine injection, gadolinium butanol injection and so on. In terms of CDMO business, the progress of Jiangxi Sili project is 87%, and the company is speeding up the layout.
Profit forecast and valuation
Taking into account the impact of the Shanghai epidemic on the company's logistics, production and sales, we downgrade the company's 2022 / 2023 EPS 9.8% PE 6.6% to 2.06 pm 2.82 yuan, and the current stock price corresponds to 2022 PE 2023 15 times. We maintain the company's outperform industry rating, lowering the company's target price by 24.8% to 51.56 yuan (based on the comparable company's 2022 PE valuation), corresponding to the 2022 PE of 25 PE in 2023, which has 23.6% upside compared to the current stock price.
Risk
The increase in the price of upstream raw materials leads to the increase of cost and the pressure of gross profit margin; the excessive reduction in the price of collection leads to the decline of the gross profit margin of the company's preparation; the intensification of market competition leads to the decline of the company's business share of iodine contrast agent; the impairment of goodwill.