Zhaoyan New Drug (603127) Company dynamic comment: Interim report performance exceeded expected orders and a large number of new production capacity support continued high growth

Zhaoyan New Drug (603127) Company dynamic comment: Interim report performance exceeded expected orders and a large number of new production capacity support continued high growth

Event: On August 12, the company released its semi-annual report for 2019 to achieve revenue 2.

10,000 yuan, an increase of 48 in ten years.

65%, net profit attributable to mothers was 4,013.

630,000 yuan, an increase of 78 in ten years.

86%, net profit after deduction is 2,863.

320,000 yuan, an increase of 87 in ten years.

21%, basic profit income is 0.

25 yuan.

The performance continued to grow rapidly, and the overall cost was well controlled.

The company achieved revenue in the first half of 20192.

10,000 yuan, an increase of 48 in ten years.

65%, net profit attributable to mothers was 4,013.

630,000 yuan, an increase of 78 in ten years.

86% in the second quarter of the single quarter achieved revenue1.

26 ppm, an increase of 51 in ten years.

45%, net profit attributable to mothers was 2,809.

660,000 yuan, an increase of 105 in ten years.

55%, continued high growth performance, exceeding market expectations.

Comprehensive gross profit margin of 50.

90%, a decrease of 0 every year.

42 single, mainly because the clinical CRO and pharmacovigilance business is still in the replenishment period to achieve profitability; net profit margin 19.

86%, an increase of 3 per year.

25 units, the effect of scale gradually emerged.

In terms of expenses, the selling expense ratio is 2.

49%, an annual increase of 0.

The four single ones are mainly due to the increase in labor budget (+ 161%), and the management expense rate is 27.

99%, a decline of 5 per year.

The 62 single ones were mainly due to the limited increase in management expenses under the increase in revenue and the overall period expense ratio was 29.

99%, down 4 each year.

52 in total, the proportion of R & D expenses to revenue was 7.

95%, rising by 0 every year.

12 units, the cost is well controlled overall.

The core business has sufficient orders in hand, the launch of new production capacity has contributed to the growth of performance, and the overseas business layout has accelerated.

The company is a leader in the field of preclinical safety evaluation in China. It has the most complete GLP certification in the market. It has established a professional service team of nearly 1,000 people and has extensive industry experience.

In the first half of 2019, both the number of completed topics and the number of topics in research achieved a breakthrough increase over the same period of the previous year, and the amount of extended contracts increased by approximately 21% compared with the same period in 2018. The company’s accounts received in advance4 continued at the end of the reporting period.

08 million yuan, an increase of 23 in ten years.

56%, about 100,000 yuan in orders, an increase of 17.
.
6%, sufficient orders in hand, and strong 深圳spa会所 certainty of future performance growth.
Renovation of Beijing Zhaoyan Small Animal House and Suzhou Zhaoyan Animal House. Buildings 3 and 7 will be replaced in the first half of 2019. At the same time, the total area of the animal house will exceed 11,000 square meters, which will effectively alleviate the company’s capacity consumption and service throughput.With the further increase of capacity, the functional laboratory under renovation is expected to be put into use in September, and the repeated isotope laboratory is expected to be used for 12 months. The planning and design of the Guangxi Wuzhou Experimental Animal Base has been completed and construction started in April 2019.The Yan project is expected to start in October 2019, and the successive launch of new production capacity will strongly support the company’s future performance.

In addition, the company accelerated the implementation of its internationalization strategy. In May 2019, the company acquired Biomere, one of the top three preclinical CRO companies in the New England region of the United States, with cash to further improve the company’s market layout in the United States and obtain its quality customer resources.年 年下半年将完成股权交割,若实现并表将一定程度增厚公司业绩。
The new business is progressing smoothly and is expected to become a new profit growth point for the company.

In July 2018, Zhaoyan Mingxun, a holding subsidiary, was established to develop pharmacovigilance services. Zhaoyanxun automatically developed a one-stop pharmacovigilance management platform, iPVMAP, and has been working with enterprises of different sizes, including central enterprises, joint ventures, and research and development since its establishment one year ago.Enterprises, listed companies, etc. have established pharmacovigilance partnerships, and the scope of services covers drugs, medical devices, vaccines, etc., further supplementing and extending Zhaoyan’s new drug service system.

In August 2018, Zhaoyan Pharmaceutical, a wholly-owned subsidiary, was established to develop clinical CRO business. At present, it has signed contracts with hospitals at the city level and above. At the same time, it has jointly established early drug clinical centers. As of the first half of 2019, there are 2 clinical phase I research centersThe hardware, personnel team and quality system have been completed. It is expected that the business can be formally undertaken before the end of the year.

The pharmacovigilance and clinical CRO business is progressing smoothly, and it is expected to begin to formally contribute profits in 2020, becoming a new growth point for the company’s performance.

Investment suggestion: As a domestic high-quality pre-clinical safety evaluation agency, the company has obvious advantages in terms of facility scale, industry qualifications, business experience, and customer resources. There are too many orders in hand and new production capacity has been successively launched to provide rapid performance growth.Accelerate overseas business layout through outbound mergers and acquisitions.

The pharmacovigilance and clinical services business is progressing smoothly and is expected to become the company’s new profit growth point.

We predict that the company’s EPS for 2019-2021 will be 0.

98/1.

41/2.

01 yuan, corresponding to the price-earnings ratio of 55X, 39X, 27X, maintaining the “recommended” level.

Risk reminders: risks of changes in pharmaceutical policies; increased competition risks; market development is not up to expectations; construction in progress is not up to expectations.