Incidents:
On the evening of March 7, the company issued an announcement on promoting the implementation of the “Double Improvement of Quality and Return” action plan. The company responded positively and implemented the guiding principles of “we must activate the capital market and boost investor confidence” and “we must vigorously improve the quality and investment value of listed companies, and take stronger and more effective measures to stabilize the market and stabilize confidence”. The company has always attached importance to investors' interests. In order to improve the quality of the company's business development, investment value and level of sustainable development, and actively maintain market stability, the company has formulated a “double improvement in quality and return” action plan based on confidence in the company's future development prospects and recognition of the company's value.
Comment:
Quality and return have both improved, and Gloria Ying is taking action. The company's specific actions in formulating an action plan include: 1) focusing on the main business and adhering to technology-driven development; 2) implementing a two-wheel drive development strategy to help the company maintain a high-quality development trend; 3) actively expanding customers and becoming a “partner in global pharmaceutical R&D and production”; 4) maintaining steady growth in performance and sharing development results with investors; 5) improving the quality of the company's information disclosure and focusing on investor relationship management.
The company maintains high investment in R&D, accelerates business and customer base expansion, and promotes continuous improvement in business quality. 1) The company insists on high R&D investment and focuses on developing core technologies aimed at improving the productivity of enterprises, such as: continuous reaction technology, synthetic biotechnology, etc.; 2) Relying on its advantages in the field of small molecule CDMO, the company promotes the rapid implementation of “small molecule business” and “emerging business” two-wheel drive strategies and continues to actively explore emerging business fields; 3) The company has established cooperative relationships with 15 companies in the Top 20 MNC, and has continuously served 8 of them for more than 10 years. At the same time, the company is actively expanding Biotech customers at home and abroad, and is committed to becoming a partner in global drug development and production.
The company continues to buy back, and the dividend rate remains high. 1) Performance grew steadily. Revenue CAGR for 2016-2022 was 45.00%, net profit CAGR was 53.47%, and main business revenue (excluding large COVID-19 orders) increased 24.51% year-on-year in the first three quarters of 2023; 2) Actively implemented a repurchase plan to repurchase approximately 5.23 million shares of the company's shares for 799 million yuan in 2022; the repurchase plan was announced again in January 2024, with an estimated repurchase amount of 600 to 1.2 billion yuan. In addition, the company insists that cash dividends return investors. Each year, the amount of cash dividends accounts for about 20% of the net profit returned to the mother for the year, with a cumulative cash dividend of 1,369 billion yuan in 2016-2022.
Profit forecast and investment suggestions: We expect the company's revenue from 2023 to 2025 to be 87.83/79.81/99.26 billion yuan, up -14.3%/-9.1%/24.4% year on year; net profit due to mother is 25.38/19.84/2.51 billion yuan, up -23.1%/-21.8%/26.5% year on year. We give 2024 forecast net profit to mother 25 times PE, corresponding target market value of 49.6 billion yuan per share, and continue to give a “buy” rating.
Risk warning: the risk of new orders or new projects falling short of expectations, the risk of new business or new customer expansion falling short of expectations, the risk of increased competition, the risk of exchange rate fluctuations, the risk of insufficient production capacity investment, and geopolitical risks.