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东富龙(300171):公司业绩整体稳健 疫情影响致2季度单季承压

East Fulong (300171): the company's overall performance is under pressure due to the impact of the steady epidemic situation in the second quarter.

中信建投證券 ·  Aug 30, 2022 18:36  · Researches

Event

On the evening of August 29, the company released the 2022 China report. In the first half of 2022, the company realized revenue of 2.43 billion yuan, an increase of 34% over the same period last year, a net profit of 403 million yuan, an increase of 18% over the same period last year, a deduction of 371 million yuan from non-net profit, an increase of 21% over the same period last year, and a weighted average ROE of 8.90%, a slight decrease of 0.12% over the same period last year.

Brief comment

The overall performance of the company is sound, and the impact of the epidemic has caused the company to achieve a net profit of 3.91-425 million yuan in the first half of 2022 and deducted non-net profit of 3.62-396 million yuan in the first half of 2022. The contract debt at the end of the second quarter was 3.92 billion yuan, which was basically the same as that at the end of the first quarter. The steady growth of the company's performance is mainly due to the increased production capacity and enhanced order delivery capacity. From the perspective of business, the company's income accounted for 10.86,4.88 and 162 million yuan respectively for injections, bioengineering, medical equipment and consumables, which were more concerned by the market before, an increase of 65%, 22% and 28% respectively over the same period last year.

From a single-quarter point of view, the company Q2 achieved an income of 1.19 billion yuan, a net profit of 192 million yuan and a non-net profit of 173 million yuan. The Q2 single-quarter performance was mainly due to the impact of the epidemic in Shanghai in the second quarter.

Domestic substitute forerunner, active layout of biological raw solution and cell therapy equipment consumables company actively layout biological pharmaceutical raw liquid preparation (DS) equipment consumables and cell therapy equipment consumables, while sales have increased significantly at the same time In the research project, we have actively developed disposable cell expansion system, CAR-T cell processing system, disposable biological reaction bag (MB), disposable stirring bag (MM), serum-free medium for CHO cells and mesenchymal stem cells, Protein L and Protein G affinity chromatography media, etc., and the development project has progressed to the sample / prototype stage.

Domestic substitute forerunner, active layout of biological raw solution and cell therapy equipment consumables company actively layout biological pharmaceutical raw liquid preparation (DS) equipment consumables and cell therapy equipment consumables, while sales have increased significantly at the same time In the research project, we have actively developed disposable cell expansion system, CAR-T cell processing system, disposable biological reaction bag (MB), disposable stirring bag (MM), serum-free medium for CHO cells and mesenchymal stem cells, Protein L and Protein G affinity chromatography media, etc., and the development project has progressed to the sample / prototype stage.

Fixed increase in fund-raising, a new round of capital expenditure opens up room for future growth

The company plans to raise no more than 3.2 billion yuan to invest in the biopharmaceutical equipment industry trial production center project, Jiangsu biomedical equipment industrialization base project, Hangzhou life science industrialization base project and so on. In the history of the company, the original value of fixed assets and machinery and equipment increased greatly from 2014 to 2016, and the increment since 2017 is relatively small, while the scale of income has expanded rapidly in recent years. Under the background of the continuous prosperity of the industry and the continuous expansion of business, the company has opened a new round of capital expenditure to open up the space for future growth. After reaching production, the total income of the fixed increase project is expected to exceed 5.4 billion yuan, and the total profit is more than 1.05 billion yuan, which is expected to create another East Fulong.

Domestic pharmaceutical equipment consumables forerunner, the internationalization process of the company to start a new era of internationalization began as early as 2022. In the first half of 2000, the company's overseas revenue reached 625 million yuan, accounting for 26% of the total revenue. The proportion of total gross profit reached 31%, and internationalization has been on a considerable scale. According to the company's website, in February 2022, the company supplied liquid distribution system, filling system, light inspection and rear packaging equipment for the world's fifth-ranked CDMO Recipharm French factory, and the Recipharm French factory project provided contract manufacturing services for Moderna Inc mRNA COVID-19 vaccine. In addition, the company's DS section of bioengineering equipment and consumables have also achieved export breakthroughs in the past two years.

From the perspective of regional sales structure, overseas sales are mainly from Europe and Asia, and we expect to be mainly from Russia and India. In 2021, the company will set up new subsidiaries in Hong Kong, India, Indonesia, Turkey, Australia, Dubai, Vietnam, South Africa and other regions and countries. On the one hand, it can further promote international business, on the other hand, it also helps the company to carry out overseas mergers and acquisitions. Strategically, the company has clearly proposed to promote the development of life science, food equipment and other businesses through epitaxial mergers and acquisitions.

Financial analysis: contract liabilities were flat month-on-month, and new production capacity and fixed assets increased significantly. At the end of the second quarter, the contract debt was 3.92 billion yuan, which was basically the same as at the end of the first quarter. In the first half of 2022, the company's gross profit margin was 42.2%, down 2.9% from the same period last year. We think it is mainly due to the decline in the prices of some products and the rise in the prices of raw materials. In terms of period expenses, the company's sales, management, R & D and financial expenses in the first half of the year were 1.09,2.14,1.51 and 12 million respectively, an increase of 32%, 24%, 53% and 52% respectively over the same period last year, and the four expense rates were 4.5%, 8.8%, 6.2% and 0.5% respectively, with year-on-year changes of-0.1,0.7,0.8,0.6 percentage points respectively. The increase in various expenses is partly due to the expansion of the company's business scale and partly due to equity incentives, the change of financial expenses is related to the change of exchange rate, and the angle of expense rate is basically the same as the same period last year. From the perspective of cash flow, the overall net cash flow of the company's operating activities is negative, mainly due to the increase in accounts receivable and inventory, which increased by 31% and 18% respectively compared with the end of 2021. As for fixed assets, due to the partial commissioning of Dongtai's production capacity, the company's fixed assets reached 681 million yuan at the end of the second quarter, an increase of 93% compared with the end of 2021.

Profit forecast and investment rating

We estimate that the operating income of the company from 2022 to 2024 will be 57.6,69.5 and 8.56 billion yuan respectively, and the net profit of returning to the mother will be 9.5,11.7 and 1.45 billion yuan respectively, with a year-on-year growth rate of 15%, 23% and 24% respectively, corresponding to 18,14 and 12 times of PE. We are optimistic about the company's layout in the area of equipment / consumables in the biopharmaceutical industry chain and maintain the buy rating.

Risk analysis:

The industry competition aggravates the risk, the new product development progress is less than expected risk, COVID-19 vaccine related order fluctuation risk and so on.

The translation is provided by third-party software.


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