Main points of investment
Performance: excluding foreign LNP commercial product orders affecting steady profit growth 2022Q1-Q3: the company achieved operating income of 320 million yuan, an increase of 22.6% over the same period last year; net profit of 170 million yuan, up 16.0% over the same period last year; and net profit of 160 million yuan, an increase of 20.7% over the same period last year.
Excluding the influence of foreign LNP commercial product orders, 2022Q1-Q3 's net profit increased by 30.0% over the same period last year; net profit after deducting non-return increased by 37.8% over the same period last year.
2022Q3: the company achieved operating income of 110 million yuan, basically flat; net profit of 50 million yuan, down 12.9% from the same period last year; and non-return net profit of 60 million yuan, an increase of 16.0% over the same period last year.
Growth analysis: service projects continue to expand, looking forward to the new capacity release company's accumulation based on PEG modification technology, is expected to continue to benefit from the Chinese market dividend + overseas varieties listed, own innovative drug research and development and PEG modification industry expansion is expected to provide additional increments and catalysts:
① service project continues to expand: according to the company's report, "the company has supported the listing of four polyethylene glycol modified drugs in China, and more than 30 customers of polyethylene glycol modified drugs or polyethylene glycol medical devices have applied for clinical trials in China, accounting for about 2/3 of all domestic enterprises that have applied for clinical trials." In the field of international pharmaceutical application of polyethylene glycol derivatives, the company has deeply participated in the international mainstream market competition as a major emerging participant. The company supports 3 medical device products listed in overseas markets, 1 overseas commercial product, and 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. "We believe that the company has a relatively high proportion of domestic cooperation projects and the number of projects is growing rapidly. The technical ability and comparative advantage of the company can be verified from the side.
② is waiting for the release of Panjin capacity: in addition, we believe that the epidemic situation in Tianjin and capacity constraints may affect the quarterly profit growth, but it does not affect the overall order boom of the company in 2022 and the company's competitiveness in the PEG field (according to the company's mid-2022 report, the amount of contracts signed but not yet fulfilled is 278 million yuan as of mid-2022), and if Panjin production can be successfully put into production. Will transfer part of the non-GMP level of preclinical research product demand to ease capacity constraints.
Profitability analysis: the change in product structure led to a decrease in gross profit margin 2022Q1-Q3 to 85.1%, a year-on-year decline in 1.0pct, mainly due to "changes in the proportion of sales at home and abroad, as well as changes in the product structure of foreign sales income". Among them, 2022Q3 gross profit margin was 85.0%, which decreased 3.4pct compared with the same period last year. 2022Q3 R & D expenditure rate analysis showed that 2022Q3 R & D expenditure rate was 17.4%, up 0.2pct from the same period last year. The sales expense rate was 1.0%, down 2.2 pct from the same period last year; the financial expense rate was-7.8%, down 7.3pct from the same period last year, mainly due to the influence of exchange earnings; the management expense rate was 11.0%, up 1.3pct from the same period last year Under the influence of the above factors, the company's 2022Q3 net interest rate decreased 7.5pct compared with the same period last year. Taking into account the increase in depreciation and amortization expenses under the release of new production capacity, changes in export product structure, increased revenue from technical services and the company's R & D expenditure, we expect the company's overall net interest rate to be maintained from 2022 to 2023.
Business quality analysis: cash rebate improvement, optimistic about the continued improvement of business quality 2022Q1-Q3 operating activities cash flow into 380 million yuan, an increase of 45.8%, higher than the income growth rate in the same period The cash outflow from operating activities totaled 180 million yuan, an increase of 28.4% over the same period last year, resulting in a 65.8% increase in net cash flow from the company's operating activities compared with the same period last year. In addition, compared with the China report, the company's inventory turnover and accounts receivable turnover have accelerated. I am optimistic that the quality of operation will continue to improve.
Profit forecast and valuation
According to the company's three-quarter report, taking into account the adjustment of the company's product structure and the impact of the epidemic situation, we adjusted the company's EPS to 3.69,4.81,6.22 yuan per share from 2022 to 2024 (the previous values were 4.00,5.33 and 7.05 yuan per share respectively), and the closing price on October 31, 2022 corresponds to 44 times PE in 2022. We continue to be optimistic about the company's performance flexibility under the new application scenario of PEG based on technological advantages, taking into account the company's competitive advantage, development stage and valuation level, and maintain the "overweight" rating.
Risk hint
Core project R & D investment or clinical failure risk; core project termination risk; order delivery volatility risk; production safety accident and quality risk; exchange rate fluctuation risk
