20220428-招银国际-泰格医药-300347.SZ-Effectively_mitigating_the_impact_of_COVID-19_outbreak_4页_958kb

Tigermed (300347 CH) Company Update Summary

Core Content

Tigermed, a leading player in the China healthcare sector, reported its 1Q22 earnings, which were largely inline with expectations. The company demonstrated strong performance with revenue increasing by 102% YoY to RMB1,818 million, representing 26% of the full-year estimate. Attributable net income rose by 14% YoY to RMB518 million, while attributable recurring net income surged by 65% YoY to RMB378 million, contributing to 23% of the full-year estimate.

The Clinical Trial Solutions (CTS) segment was the primary driver of growth, with revenue jumping by approximately 150% YoY due to active participation in multi-regional clinical trials (MRCTs) related to the pandemic and strong demand for innovative drugs and medical devices. Excluding pandemic-related revenue, CTS growth was still robust at around 50% YoY. The gross profit margin (GPM) improved from 37.6% in 4Q21 to 38.8% in 1Q22, attributed to milder RMB appreciation and the rapid growth of high-margin services like data management and statistics analysis (DMSA) and lab services.

The impact of the Omicron outbreaks in China was limited, particularly in Shanghai and Changchun, which account for only 4.2% of the company's total operating clinical centers in China and 6.7% of patient enrollment in April. Tigermed implemented measures to ensure the smooth operation of clinical trials, with only about 500 out of 12,000 enrolled patients missing follow-ups, and many continuing their treatment. Lab services were also minimally affected, as Shanghai contributes less than 20% of total lab service revenue.

Tigermed is focusing on expanding high-margin businesses, such as clinical trials operation and DMSA, while adopting a conservative approach to the SMO (Site Management Organization) segment due to its low profitability. The company is also exploring business opportunities with MNC (Multinational Corporation) clients in China and in the Great Bay Area and Boston in the US.

Key Financial Highlights

Earnings Forecast

• Recurring net profit growth: Management aims for above 40% YoY growth in 2022E.
• Revenue growth: 36% / 31% / 29% YoY for FY22E / FY23E / FY24E.
• Recurring net income growth: 41% / 34% / 33% YoY for FY22E / FY23E / FY24E.

Valuation and Target Price

• Target Price (TP): RMB173.39 (revised from RMB183.56).
• DCF model: Based on a 9-year model with a WACC of 9.84% and a terminal growth rate of 3.0%.
• Current Price: RMB89.76.
• 12-Month Price Performance: The stock has shown a 93.17% upside potential based on the revised TP.

Shareholding and Stock Data

Share Performance

Analyst Ratings and Recommendations

• CMBIGM Rating: BUY
• Potential Return: Over 15% over the next 12 months
• Reason for Buy: Strong growth in high-margin segments, solid backlog, and strategic focus on expanding into international markets.

Key Ratios

Auditor and Related Reports

• Auditor: BDO
• Related Reports:
  • Ceaseless globalization efforts – 30 Mar 2022
  • Impressive backlog growth momentum and enhancing global competency – 25 Oct 2021
  • Strong backlog growth driven by solid demand – 25 Oct 2021

Conclusion

Tigermed is well-positioned to benefit from the continued demand for clinical trial services, particularly in high-margin areas. The company's performance in 1Q22 reflects strong resilience amid the ongoing challenges of the pandemic, and its strategic focus on high-margin business segments and international expansion is expected to drive future growth. The revised target price and BUY rating indicate positive expectations for the company's performance in the coming year.