Zhongtai International: reiterate zhaoyan new drug buy rating target price to hk $130.75

2022-05-11 0 By

Zhongtai International issued a research report that reiterated zhaoyan new drugs (06127) “buy” rating, the main business 2021 revenue are fast growth, drug non-clinical research services, clinical services and other business, experimental model supply business revenue increased 40.8%/ 45.5%/23.2% year on year.As the revenue of clinical CRO business slightly exceeded expectations last year, and the annual sales expense ratio and management expense ratio decreased, the revenue forecast for 2022-23E was increased by +0.1%/+0.8%, and the net profit forecast for shareholders for 2022-23E was increased by +6.7%/+2.6%, corresponding to 60 times 2,022eper.Target price rose to HK $130.75 from HK $128.58.Zhongtai International expects that the company’s revenue will reach 32.5% in 2021-24ECAGR, mainly due to the continuous enhancement of the company’s ability to obtain orders and the balanced development of domestic and overseas businesses:More than 2.8 billion yuan of new orders were added in 2021, including a 65% year-on-year increase to 2.55 billion yuan in the domestic business, and a 75% year-on-year increase to about 280 million yuan in the overseas subsidiary Biomere.Most of the company’s orders can be completed within 1-2 years, with high performance visibility.According to the report, the capacity of preclinical r&d services continues to expand and service capacity will continue to improve: Zhaoyan Suzhou’s 7,500 square meter breeding facility has been put into operation by the end of 2021, and an additional 1,800 square meter laboratory has been renovated and certified as a biosafety level II laboratory.The company will actively expand animal feeding and drug evaluation base in the future.The second phase of Suzhou Zhaoyan is expected to be put into use in the second half of 2022, with an additional 20,000 square meters of breeding facilities, and drug safety assessment and release research and development bases in Guangzhou and Wuxi are also under construction.As these bases are put into operation, the company’s service capabilities will continue to improve.According to the report, the company used to focus on pre-clinical research and development services, but in recent years, the service capacity of the clinical CRO segment has increased significantly.In 2021, the company passed 14 laboratory quality assessment projects of Beijing Municipal Clinical Testing Center, and passed the novel Coronavirus nucleic acid test capability test organized by The Chinese Metrology Academy in June, which is conducive to building a seamless ecology of drug research and development from pre-clinical to clinical research, and also helps to expand orders.Risk warning: The global spread of COVID-19 may affect the company and its customers;If the price of animal experimental models increases more than expected, performance may be affected;Overseas expansion and clinical expansion may be slower than expected.