Revenue continued to grow at a high rate for the whole year, and the loss of fair value of convertible bonds dragged down apparent profits: the company's operating income in 2020 was 697 million yuan (the same below), an increase of 115.74% over the same period last year; excluding the 258 million yuan income generated by Longhua Pharmaceutical, the company's other business income was 439 million yuan, an increase of 35.91% over the same period last year. The net profit of reversion in 2020 is-387 million yuan, which is mainly due to the loss of 547 million yuan in the fair value of convertible bonds. After adjusting for the loss of fair value of convertible bonds, interest costs of convertible bonds, transaction costs of convertible bonds, redemption income of convertible bonds, amortization of mergers and acquisitions, transaction costs of mergers and acquisitions and other factors, the adjusted net profit was 252 million yuan, down 20.66% from the same period last year. The main reason for the significant difference in the changing trend of adjusted net profit and operating income in 2020 is that the fair value change income of EFS business in 2020 is 107 million yuan, which is 106 million yuan lower than that in 2019.
The endogenous extension is progressing smoothly, and the layout of the industrial chain is becoming more and more perfect: in terms of technology, the company has built ten core technology platforms, including protein preparation and structure research, and its technical capability has been continuously strengthened. In terms of production capacity, the company continues to expand its capacity to meet the fast-growing demand for orders, with 1619 employees (including Longhua Pharmaceutical) in 2020, and supporting facilities in Shanghai, Hangzhou and other regions. While deeply ploughing the original business areas, the company has also strengthened its layout to the lower reaches of the industrial chain, such as the acquisition of Longhua Pharmaceuticals, the construction of new laboratory facilities in Hangzhou and the acquisition of SYNthesismed chem. With the gradual completion of these new expansion business integration, the construction of the service capacity of the whole industry chain of the company's CRO/CDMO will initially take shape, which will also make it possible for early R & D projects to be continuously transformed downstream, so that the value of the high-quality flow entrance of the company's early R & D services can be reflected. In addition, the company's EFS business is progressing smoothly and the number of investment incubators is increasing. With the increasing maturity of the business model, the revenue magnification value of the EFS model will gradually appear and thicken the performance.
Our point of view: the profit and loss of project fair value change of EFS business and the income generated by project withdrawal will fluctuate in different years, thus affecting the company's apparent profit. But on the revenue side, even without taking into account the impact of Longhua Pharmaceuticals, the compound annual growth rate reached 44.58% from 2018 to 2020, indicating that the company is still in a period of rapid growth. Driven by multiple factors, such as the rapid endogenous growth, the increasing maturity of the EFS model, and the smooth realization of the expansion in the lower reaches of the industrial chain, the company's performance is expected to accelerate upward.
Risk hint: the progress of new business development is lower than expected, the integration of acquired companies is not as expected, and incubate the risk of project investment failure.