Incident: The company released its 2021 annual report, achieving annual revenue of 1,258 million yuan (+5.43%); net profit of Guimo 43 million yuan (-8.62%); net profit of non-return mother was 126 million yuan (+56.46%). At the same time, the company released its 2022 quarterly report, which achieved revenue of 500 million yuan (+47.86%) in 2022/Q1; Guimu's net profit was 115 million yuan (+128.94%), and Q1 performance exceeded expectations.
The CDMO business doubled, and MSD orders will begin to be delivered in '22: the CDMO business achieved revenue of 265 million yuan (+118.3%) in 2021, achieving double growth. In 2021, the company signed a 10-year CDMO strategic cooperation agreement with MSD in the fields of pet medicine, veterinary medicine, and animal health. By the end of 2021, the first nine projects had gradually completed technology transfer, and commercialization was imminent. We believe that the cooperation with MSD will have a profound impact on the company's new CDMO business. It will continuously improve the company's technical capabilities, project management capabilities, and delivery capabilities. CDMO is expected to drive rapid growth in the company's performance in the future.
Relying on technological cost advantages+collection to quickly open up the pharmaceutical business space: the pharmaceutical business achieved revenue of 153 million yuan (+103.6%) in 2021. Relying on technology and cost advantages, the company was quickly shortlisted for collection, and performance was rapidly released. In 2021, the company's perindopril tert-butamine tablets and pregabalin capsules won the bid for the fourth batch of national collection and were released quickly; atorvastatin calcium tablets, losartan potassium tablets, and lisinopril tablets won bids for joint collection in 13 provinces of Guangdong, Jiangsu and Shandong. In terms of variety approval, rosevastatin calcium tablets, atorvastatin calcium tablets, and losartan potassium tablets were approved for marketing in 2021; apixaban tablets and isoniazid tablets were approved for marketing in April 2022. In terms of R&D pipelines, the company has a total of 8 products, including valsartan hydrochlorothiazide tablets, rivaroxaban tablets, and virgliptin tablets, which are under CDE review; 8 products, including valsartan amlodipine tablets and engliflodipine tablets, are in the BE stage, and more than 30 other products are under research. Abundant R&D and application pipelines lay a good foundation for the long-term expansion of the company's pharmaceutical business.
The COVID-19 order provides performance flexibility, and SM1/SM2 is already available at the tonnage level: the company has achieved commercial tonnage delivery of SM1/SM2, the key intermediate required to produce Nimatvir. Currently, the production capacity of SM1/SM2 can reach up to 15-20 tons/month, and a new production capacity of 210 tons under construction is expected to be completed by the end of 2022. Currently, the supply of SM1/SM2 is in short supply, and the huge demand for intermediates that MPP will bring in in the future will provide the company with a continuous increase in performance. In terms of other varieties, the company also has mature process technology for VV116-related intermediates, corresponding to a production capacity of 100 tons; furthermore, the company has prepared a variety of intermediate/API synthesis processes for 3CL protein-targeting COVID-19 specific drugs being developed at home and abroad, and is actively cooperating with R&D companies.
Profit forecast and investment rating: Considering the pandemic and expectations of global raw material price increases, we will adjust the company's net profit of 2022-2023 from 346/451 million yuan to 296/420 million yuan. The estimated net profit to the mother in 2024 is 559 million yuan. The current market value corresponding to the 2022-2024 PE valuation is 23/16/12 times, maintaining the “buy” rating.
Risk warning: The progress of formulation declaration falls short of expectations, delivery of CDMO orders falls short of expectations, etc.
