The performance grew at a high speed and exceeded expectations.
2021H1 achieved a revenue of 4.407 billion yuan (+ 126.7%) and a net profit of 1.842 billion yuan (+ 150.3%), which exceeded expectations, thanks to the rapid growth of revenue from clinical phase III and commercial projects.
From a regional point of view, China, the United States and Europe increased by 42.3%, 149.3% and 706.8% respectively compared with the same period last year.
Gross profit margin 52.12% significantly increased 11.6pp, mainly due to the improvement of capacity utilization.
In the first year of CMO, the Win-the-Molecule strategy continued to realize the pre-IND project income of 1.45 billion yuan (+ 50.4%); after the IND project income of 1.94 billion yuan (+ 109.2%), commercial income of 890 million yuan, accounting for 20.2%. Up to now, there are 408 2020H1 comprehensive projects (79 new projects), including 212preclinical projects, 116clinical phase I, 44 II phase, 32 II phase, and 4 commercial projects (2 new: GSK/Tesaro 's PD-1 and GSK/ Vir's new crown neutralizing antibodies). Outstanding orders were US $12.5 billion (+ 31.7%), of which outstanding service orders reached US $7.2 billion (+ 25.2%), thanks to the vaccine CMO contract, the addition of 8 COVID-19 projects and the rapid recovery of non-COVID-19 business. The CAGR of outstanding orders reached 184 per cent from 2016 to 2020. Revenue from unfulfilled potential milestones reached $5.2 billion, up 41.9% from a year earlier.
Forward-looking layout of technology platform, continuous expansion of production capacity
The company has WuXiBody double antibody platform, WuXia cell line platform, WuXiUP continuous production platform, SDArBodY platform and other technologies, a total of 59 patent applications. There are 13 IND projects in WuXiUP project, 31 of 5 BLA;WuXiBody projects are expected to be declared in 2021, and it is expected to be approved by IND in 1-2 years. Yao Ming Hyde has signed orders for nine vaccines, including about US $300m for COVID-19 vaccine. Set up WuXiXDC with Hequan Pharmaceutical Co., Ltd., focusing on integrated biocoupling drugs. There are 48 global projects on hand, accounting for nearly 20% of the market. The current production capacity is 150,000 litres and is expected to expand to 430000 litres in 2024.
Risk tips: the progress of research and development is not as expected; the number of project terminations is increasing; the impact of the global epidemic, and so on.
Investment advice: raise the profit forecast and valuation, maintain the "buy" rating upgrade and new profit forecast for 2021-2023, the net profit for 2021-2023 is 31.4 billion yuan (formerly 1.919 billion yuan), a year-on-year growth rate of 86pm 41max 40%; diluted EPS is 0.74 pound 1.47 yuan, and the current share price corresponds to 138pm 97pm 70x. As the leading company of biological agent CDMO, the company will raise its reasonable valuation to HK $156.7-174.1 (formerly HK $104.8-111.8) and maintain its "buy" rating in the next three years according to PE 90-100x in 2023.