Cinda Securities: Rated WuXi AppTec

2022-01-19Zhou Ping of Cinda Securities Co., Ltd. conducted a study on WuXi AppTec and released a research report "Company Review Report: Performance Exceeded Expectations, Leading Position Is Solid", this report gave WuXi AppTec a rating, the current stock price is 112.0 yuan.

WuXi AppTec (603259)

Event: The Company announces 2021 pre-increases. In 2021, it is expected to achieve revenue of 22.82-22.90 billion yuan (+38.0-38.5% year-on-year), net profit attributable to the mother of 4.97-5.03 billion yuan (year-on-year +68.0-70.0%), non-net profit attributable to the mother of 4.01-40.05 billion yuan (+68.0-70.0% year-on-year), net investment income of about 1.66 billion yuan and fair value loss of H-share convertible bond derivatives of about 1.00 billion yuan during the reporting period.

Quarterly results grew steadily, continuing to maintain quarter-on-quarter growth. According to the announcement, 2021Q4 achieved revenue of 6.30-6.38 billion yuan (+33.4-35.2% year-on-year), maintaining positive growth from the previous quarter, net profit attributable to the mother of 1.41-1.47 billion yuan (year-on-year +138.4-148.4%), deduction of non-attributable net profit of 900-950 million yuan (year-on-year +23.2-29.7%).

The performance of each business segment is eye-catching, and the company's healthy development is promoted in synergy. In 2021, 732 new molecules were added to the small molecule CDMO section, with a total of 42 commercial projects (Q4+5), 49 phase III clinical trials (Q4+2), and 39 clinical phase II-Q4+10 and 2 clinical phase III clinical trials. There are 53 preclinical +I (Q4+8), 8 clinical phase II (Q4+2) and 11 clinical phase III programs in the ATU section. The DDSU sector declared a total of 26 INDs (H2+10) and 23 CTAs (H2+11). The clinical trials business has 1 IND, 3 clinical phase III (+2), 14 clinical phase II, and 73 clinical phase I (+1) programs. The company has sufficient orders and strong demand, and with the company continuously optimizing operational efficiency and capacity utilization rate, the scale effect is further reflected.

The integrated and global layout drives steady development, and the market share continues to increase. On January 10, 2022, the company disclosed at the J.P Morgan Healthcare Conference that the company's drug discovery business has a market share of 54% in the Chinese market, preclinical + clinical CRO business has an 11% market share in the Chinese market, small molecule CDMO business has a market share of 23%, and CGT CDMO business has a global market share of 6.7%, ranking third in the world. The company is oriented by innovation and research and development, adheres to the global layout of "integration, end-to-end", has strong comprehensive competitiveness, and drives the long-term and steady development of performance.

Profit Forecast: Based on the company's good performance and texture, we expect the company's operating income to be 22.863, 337.06 and 44.952 billion yuan in 2021-2023, an increase of 38.3%, 47.4% and 33.4% year-on-year; the net profit attributable to the mother is 49.85, 73.72 and 9.465 billion yuan, an increase of 68.4%, 47.9% and 28.4% year-on-year, corresponding to 70/47/37 times pe of 2021-2023, respectively.

Risk factors: the risk of declining R&D investment and outsourcing demand in the pharmaceutical industry, the risk of internationalization not meeting expectations, the risk of repeated global epidemics, the risk of competition, the risk of policy, etc.

A total of 25 institutions have given ratings and 25 buy ratings in the last 90 days; the average target price of institutions in the past 90 days has been 187.9; and the Securities Star Valuation Analysis Tool shows that WuXi AppTec (603259) good company rating is 4.5 stars, good price rating is 2 stars, and valuation composite rating is 3.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)