20220829-招银国际-泰格医药-300347.SZ-Solid_growth_amid_COVID-19_outbreaks_5页_1mb

Tigermed (300347 CH) Summary

Core Content and Key Information

Tigermed (300347 CH) demonstrated solid growth in the first half of 2022 (1H22) despite the challenges posed by COVID-19 outbreaks. The company reported:

• Revenue of RMB3,594 million, up 75% YoY, which accounted for 51% of the full-year revenue forecast.
• Attributable net income of RMB1,192 million, down 5% YoY, but attributable recurring net income of RMB771 million, up 42% YoY.
• Excluding COVID-19 revenue, 1H22 revenue still grew by ~45% YoY, indicating the strength of its core business.

The gross profit margin (GPM) dropped to 39.7% in 1H22 from 47.6% in 1H21, but remained stable compared to 2H21's 40.9%. The decline in GPM was attributed to a large proportion of pass-through revenue from multi-regional clinical trials (MRCTs). However, with the shrinking size of these projects, the company expects its GPM to recover in 2H22E.

Tigermed also reported continuous growth in the number of ongoing clinical trials, with 607 trials as of June 2022 (up from 567 as of December 2021), including 400 single-region trials in China and 58 MRCTs.

Emerging Businesses and Strategic Moves

The company's emerging businesses, such as medical registration, scientific affairs, medical translation, real-world studies, and data management and statistical analysis (DMSA), showed strong growth driven by solid demand. This indicates enhanced integrated capabilities and a diversification strategy.

Tigermed is reducing its low-margin site management organization (SMO) team to 2,503 staff (from 2,700+ in 2021), while expanding its overseas team to 1,151 staff (from 1,026 in 2021). The company is expected to enhance its overseas service capabilities through M&A.

Financial Forecasts and Valuation

The analysts maintain a BUY rating, slightly increasing the target price from RMB173.39 to RMB175.15, based on a 10-year DCF model with a WACC of 9.84% and a terminal growth rate of 3.0%.

Forecasted Financials (FY22E/FY23E/FY24E):

• Revenue: RMB7,193 million / RMB9,415 million / RMB12,143 million
• Attributable adjusted net income: RMB1,711 million / RMB2,496 million / RMB3,298 million
• EPS (Adjusted): RMB2.93 / RMB3.70 / RMB4.74
• Net profit: RMB2,555 million / RMB3,230 million / RMB4,134 million
• Gross margin: 42.41% / 46.04% / 46.62%
• Operating margin: 28.35% / 32.19% / 32.97%
• Net margin: 35.52% / 34.31% / 34.04%

Valuation Metrics:

• P/E ratio: 44.2 / 35.8 / 28.3 / 22.1
• DCF Valuation (2022E): RMB148,219 million
• Equity value: RMB2,761 million
• Price per share: RMB175.15

Share Performance and Structure

• Market Cap: RMB91,527.5 million

• Total issued shares: 872.4 million

• Shareholding structure:

  • HK investors: 25.9%
  • Xiaoping Ye: 20.3%

• Share performance (3-months):

  • Absolute: +32.3%
  • Relative: +27.0%

• 12-month price performance: Chart included (source: FactSet)

Analyst Disclosures

The research analyst certifies that:

• The views expressed accurately reflect their personal views.
• No part of their compensation is related to the specific views in the report.

The analyst also confirms:

• No trading in the stock within 30 days before the report was issued.
• No trading 3 business days after the report is issued.
• No affiliation with any Hong Kong listed companies covered in the report.

CMBIGM Ratings

• BUY: Stock with potential return of >15% over next 12 months.
• OUTPERFORM: Industry expected to outperform the market benchmark.

Disclaimer

This report is not tailored to individual investors and is not investment advice. It is subject to change and not guaranteed. Investors are encouraged to consult a financial advisor and are responsible for their own decisions.

The report is intended for specific recipients in the UK and US and may not be distributed to others without prior written consent.