occurrences
The company released its 2022 semi-annual report. The company achieved operating income of 995 million yuan, an increase of 13.13% over the previous year; net profit attributable to shareholders of listed companies was 303 million yuan, an increase of 22.54% over the previous year; and basic earnings per share of 0.53 yuan.
Analytical reviews
Quarterly data continues to improve, and non-net profit after deducting rapid growth
Looking at a single quarter, the company's 2022 Q2 revenue was 479 million yuan, +6.28% year on year; Guimu's net profit was 183 million yuan, +22.30% year on year, in line with expectations. In the first half of the year, net profit after deducting non-return to the mother was 290 million yuan, +35.19% year on year; Q2 net profit after deducting non-return to the mother was 176 million yuan, +47.01% year on year.
Cost control brings about an increase in gross margin, and financial stability continues
The company's overall gross margin for the first half of 2022 was 72.13%, +2.79 percentage points over the previous year. It mainly focuses on improving internal management and effectively controlling various costs and expenses. Operating costs increased by 2.83% in the first half of the year, lower than the growth rate of operating income.
The expense ratio for the first half of the year was 34.98%, -1.34 percentage points year on year; of these, the sales expenses rate was 17.20%, -0.76 percentage points year on year; the management expenses rate was 18.73%, -1.32 percentage points year on year; the financial expense ratio was -0.94%, +0.74 percentage points year on year; net operating cash flow was 209 million yuan, +4.66% year on year.
Shanghai Sanjin Biotech's revenue grew significantly and losses narrowed. The biopharmaceutical business began a second growth curve. Guilin Sanjin has strategically entered the biopharmaceutical sector through its subsidiaries Shanghai Sanjin Biotech (Biopharmaceuticals) and Baifan Biology (CDMO), wholly-owned. With the gradual advancement of R&D, Shanghai Sanjin's revenue in the first half of 2022 was 1.9 million yuan, an increase of 285% over the previous year. Also, losses have shrunk, with losses of 115 million yuan in the first half of 2022, down from 130 million yuan in the first half of 2021. We believe that after years of layout, Baochuan Biotech and Baifan Biotech have strong potential and will start a second growth curve for the company.
Investment advice
We maintain our previous forecast. We expect the company's revenue from 2022 to 2024 to RMB 21.3/26.0/ 3.15 billion yuan respectively, an increase of 22.4%/21.8%/21.4%, respectively, and net profit of RMB 4.0/46/ 540 million yuan respectively, up 16.2%/15.5%/16.0% year-on-year respectively. The corresponding valuation is 21X/18X/16X. Considering that the company's main business is stable, the incremental sector has strong potential, and maintains a “buy” rating.
Risk warning
Performance growth fell short of expectations; progress of the epidemic exceeded expectations; and biopharmaceutical CDMO business orders and production capacity fell short of forecasts.