On October 28, the company released its quarterly report for 2020, showing that in the first three quarters of 2020, the company achieved revenue of 177 million yuan, an increase of 24.5% over the same period last year, and a net profit of 19.467 million yuan, an increase of 247.4% over the same period last year. The net profit after deducting non-return was 5.4168 million yuan, a substantial increase of 319.79% over the same period last year. Basic earnings per share is 0.09 yuan.
Main points of investment:
Company profile. The company was founded in 2002 and listed on Shenzhen gem in 2015, specializing in CRO services, clinical research services is the company's main source of income and profit. In the first three quarters of 2020, clinical research services accounted for 47% of the company's main business revenue. In addition, the company's business also covers preclinical independent research and development business, preclinical service business, technology achievement transformation service and CDMO business, as well as technical consulting services such as research scheme design, data management, data statistical analysis, Sino-US double newspaper business and so on. In 2018, the company obtained the GLP laboratory certification.
Results fell in the third quarter from the previous quarter, but rebounded significantly from the first quarter. The main reasons are: in the second quarter, the company recognized the income from the transformation of technological achievements, which is unstable due to the technical difficulties in the transformation of each technological achievement; while with the relief of the epidemic, the company's clinical service business has been restored to some extent. The first phase of the project has been fully restored, and the second and third phases still have some impact.
The further increase in the gross profit margin in the three quarters is mainly due to the increase in the proportion of the company's high gross margin technology transfer business, while the gross profit margin of the clinical business has rebounded with the development of the new project. the company's financial expense rate remained stable, and the sales expense rate increased compared with the middle report, but decreased compared with the same period last year, mainly due to the rapid growth of income after the implementation of new projects. The rate of management expenses is higher than that of the China report, but lower than that of the same period last year, mainly because the company paid out the annual bonus in the third quarter, and the subsidiary Science and Technology Parks Company carried out business, and depreciation was apportioned to the project, resulting in a decrease in management expenses; the rate of R & D expenses increased compared with the same period last year, mainly due to the increase in the company's R & D investment.
There are plenty of orders on hand. The amount of new contracts in the first three quarters of 2020 was about 320 million yuan, a rapid increase over the same period last year. At present, the order of the company is about 1 billion yuan, serving more than 60 innovative drugs and medical device projects, of which there are more than 40 in the IND phase of NMPA and FDA and more than 20 in the clinical stage. generally speaking, the later the progress of drug research and development, the larger the contract amount for CRO services. take the Ⅲ phase clinical contract for a chronic hepatitis B drug signed by the company last year as an example, the total amount of the project is 98 million. It is expected that the project that the company is currently working on will bring considerable orders to the company when it enters the next stage. In the later stage, the company will increase its market expansion efforts in order to bring about a sustained increase in orders. The company's revenue recognition method is to get the ethical approval to determine 20% of the income, from the end of the group to the end of the group, re-confirm 60%, and finally confirm 20% in the summary report, taking into account the termination of some long-term partner projects, the company wrote off part of the accounts receivable.
CDMO business progress. At present, the company has built part of its CDMO production capacity and has not yet made a profit. Once it can run smoothly, the speed of transforming income is faster.
Strengthen the construction of preclinical research team and pharmacology and toxicology. In 2019, the company introduced Wang Jianhua, an expert in R & D of Mingkang de, to build the company's innovative drug R & D team, mainly in the field of liver disease and tumor. at present, the team has more than 20 people in the field of liver disease and tumor. in the future, the company will achieve revenue through technology transfer and equity cooperative research and development; in addition, the company is also strengthening pharmacology and toxicology construction, with an animal room of about 3000 square meters, and the business is expected to be further promoted in the future.
Profit forecast and risk hint. Without considering the additional issuance factors, we maintain the earnings forecast that the earnings per share will be 0.12 yuan in 2020, 0.15 yuan in 2021 and 0.17 yuan in 2022, corresponding to the closing price of 13.45 yuan on October 28th. the dynamic price-to-earnings ratio is 112.08 times, 89.67 times and 79.12 times respectively, maintaining the company's "overweight" investment rating.
Risk hint: orders cannot continuously confirm revenue, and the epidemic breaks out again.