Event: the company released its semi-annual report of 2022, with operating income of 215 million yuan, year-on-year + 37.91%, net profit of 111 million yuan, year-on-year + 38.15%, non-return net profit of 96 million yuan, year-on-year + 23.95%, operating net cash flow of 151 million yuan, year-on-year + 173.07% EPS of 1.86 yuan, EPS of 1.34 yuan in the same period last year. Performance is in line with market expectations.
Comments:
Market share is far ahead, downstream customer product volume to support steady growth: as of 2022H1:
1) in China, the company has supported the listing of 4 polyethylene glycol (PEG) modifiers and supplied PEG to more than 30 customers of PEG modifiers and PEG medical devices in clinical trials, accounting for about 2 million of the relevant R & D companies.
2) internationally, the company supports three types of medical device products that have been listed in overseas markets and one overseas commercial product. It also supports more than 30 overseas innovative drug companies and biotechnology companies in the clinical stage or close to the clinical stage of new drug varieties and more than 10 clinical stage medical device varieties. The types of projects modified by PEG involve many innovative varieties, such as polypeptides, cytokines, nucleic acid drugs, small molecular drugs and so on.
The main reasons for the significant increase in operating performance during the reporting period are: 1) with the continuous increase in the number of orders brought about by the continuous sales of domestic downstream customers' listed products, so that the domestic product sales revenue has sustained and rapid growth; 2) the steady growth of foreign medical device end product orders and the increase in product consumption brought about by the promotion of clinical R & D progress of overseas downstream medical R & D customers, so that the sales income of foreign products has brought steady growth. 3) the domestic technical service income also increased rapidly during the reporting period with the increase of downstream customer product sales.
The R & D pipeline is slowly advanced, and the R & D investment is continuously increased to enhance the innovation strength of PEG: the R & D cost of 2022H1 is 43 million yuan, which is + 136.82% compared with the same period last year. The R & D expenditure rate is 19.99%, and + 8.35 pp year-on-year. The company continues to increase the promotion of independent R & D projects of polyethylene glycol irinotecan, JK-2122H and JK-1119I, and actively layout other R & D pipelines, and continue to invest in R & D personnel, materials and equipment.
Profit forecast, valuation and rating: considering the excellent competition pattern of the company's existing business, deep technical barriers, and rich application space for the R & D layout of drug and device projects, the estimated net return profit of the company in 2022-2024 is 2.39 / 3.12 / 414 million yuan respectively, an increase of 35.99% / 30.69% / 32.48% over the same period last year, and the corresponding EPS is 3.98 / 5.21 / 6.90 yuan respectively. The current price corresponds to 53 / 41 / 31 times PE, maintaining the "buy" rating.
Risk tips: innovative product research and development failure risk; US international trade protection risk; core technology iteration risk.