20181106-招商证券_香港_-药明生物-02269.HK-Sector_s_favoured_rebound_play_6页_1mb
报告摘要
Wuxi Biologics (2269 HK) Summary
Core Content
Wuxi Biologics (2269 HK) is identified as a sector rebound play in the pharmaceutical and healthcare industry. Despite concerns about the impact of US-China trade tensions, the company's fundamentals remain intact, and its business model, which emphasizes IP protection and separation of client and company IP, is seen as a competitive advantage.
The report highlights that the company's CMO conversion timeline is still assumed to have three CMO projects by 2019, with significant flexibility in 2019 and 2020. The recent 15% correction in the sector has made Wuxi Biologics a favorable investment opportunity due to its attractive risk/reward ratio.
Key Financials
| Metric | 2016 (RMB mn) | 2017 (RMB mn) | 2018E (RMB mn) | 2019E (RMB mn) | 2020E (RMB mn) |
|---|---|---|---|---|---|
| Consolidated revenue | 989 | 1,619 | 2,542 | 4,019 | 6,499 |
| Adjusted net profit | 221 | 408 | 655 | 1,196 | 1,936 |
| EPS fully diluted (HKD) | 0.25 | 0.42 | 0.59 | 1.01 | 1.62 |
| PER adj (x) | n.a. | 118.8 | 105.2 | 61.6 | 38.3 |
| PBR (x) | n.a. | 13.2 | 9.0 | 8.1 | 6.7 |
| Dividend yield (%) | n.a. | 0.0 | 0.0 | 0.0 | 0.0 |
Market Performance
- Stock Price Performance (1m/6m/12m): -15.0% / -20.9% / +26.6%
- HSI Performance (1m/6m/12m): -2.4% / -13.3% / -9.3%
- 52-week range (HK$): 40.0 - 98.5
- Market Cap (HK$ mn): 76,019
- Avg. Daily Volume (mn): 5.3
- BVPS (HK$): 3.63
- Shareholding Structure:
- Wuxi Biologics Holding: 59.6%
- Management: 8.0%
- Free float: 32.4%
Key Points
- US-China Tension: While the tension has raised concerns, it is seen as validating Wuxi Bio's business model and not significantly affecting its operations.
- CMO Projects: The company is expected to complete 3 CMO projects by 2019, with flexibility in 2019/20.
- Sector Rebound: Wuxi Bio is considered a favorable rebound play due to its lower valuation (62x/38x 2019/20 PER) and below 1x PEG.
- Upside Risks: Potential late-stage projects, bispecific orders with good pricing, and easing US-China tensions after key events like the mid-term election and G20 summit.
- Downside Risks: Slow order intake and RMB appreciation.
Financial Ratios
| Ratio | 2016 (%) | 2017 (%) | 2018E (%) | 2019E (%) | 2020E (%) |
|---|---|---|---|---|---|
| Consolidated revenue growth | 78% | 64% | 57% | 58% | 62% |
| Gross profit growth | 115% | 70% | 49% | 56% | 80% |
| Adjusted net profit growth | 209% | 85% | 60% | 83% | 62% |
| Gross margin (%) | 39.3% | 40.8% | 38.6% | 38.2% | 42.4% |
| Adj. net profit margin (%) | 22.3% | 25.2% | 25.7% | 29.8% | 29.8% |
| ROE (year end) | 105.9% | 19.0% | 11.0% | 14.0% | 19.2% |
| ROA | 13.2% | 11.9% | 9.5% | 12.3% | 16.4% |
Efficiency Ratios
| Ratio | 2016 | 2017 | 2018E | 2019E | 2020E |
|---|---|---|---|---|---|
| Inventory days | 39 | 41 | 42 | 42 | 43 |
| Accounts receivable days | 60 | 57 | 53 | 53 | 53 |
| Accounts payable days | 114 | 46 | 42 | 43 | 44 |
| Cash cycle days | -15 | 52 | 53 | 53 | 52 |
Liquidity
- FCF (RMB mn): -376 / -337 / -1,614 / -1,560 / 244
- Net gearing (%): 338.6 / -51.7 / -47.1 / -24.5 / -22.8
Investment Ratings
- Industry Rating: OVERWEIGHT (expect sector to outperform the market over the next 12 months)
- Company Rating: BUY (expect stock to generate 10%+ return over the next 12 months)
Peer Comparison
| Ticker | Name | P/E Ratio (17A/18E/19E) | P/B Ratio (17A/18E/19E) | P/Sales Ratio (17A/18E/19E) | Div Yield | ROE (18E/19E) | PEG |
|---|---|---|---|---|---|---|---|
| 2269 HK | Wuxi Biologics | 147.4 / 105.2 / 61.6 | 16.4 / 9.0 / 7.6 | 38.3 / 24.4 / 17.5 | 0.0 | 19.0 / 11.0 | 0.7 |
| 603259 CH | Wuxi AppTec | 113.5 / 48.0 / 41.1 | 17.5 / 9.1 / 7.2 | 14.3 / 9.5 / 7.5 | 0.6 | 20.6 / 19.4 | 1.8 |
| 300347 CH | Hangzhou Tiger-A | 56.3 / 49.8 / 36.9 | 7.0 / 8.0 / 6.8 | 10.2 / 9.8 / 7.6 | 0.7 | 14.6 / 16.2 | 0.8 |
| 603127 CH | Joinn Laboratory-A | 49.6 / 49.1 / 35.2 | 8.1 / 7.9 / 6.4 | 12.7 / 12.9 / 9.3 | N.A. | 18.7 / 16.4 | N.A. |
CRO - China Average
- Market Cap (USD mn): 4,579
- P/E Ratio (17A/18E/19E): 117.0 / 68.9 / 47.8
- P/B Ratio (17A/18E/19E): 2.8 / 2.8 / 2.7
- P/Sales Ratio (17A/18E/19E): 2.1 / 2.1 / 2.0
- Dividend Yield: 2.1
- ROE (18E/19E): 15.4 / 15.9
- PEG: 0.5
CMO - China Average
- Market Cap (USD mn): 8,738
- P/E Ratio (17A/18E/19E): 106.2 / 77.5 / 52.3
- P/B Ratio (17A/18E/19E): 7.0 / 7.6 / 8.1
- P/Sales Ratio (17A/18E/19E): 22.2 / 15.0 / 11.2
- Dividend Yield: 0.8
- ROE (18E/19E): 17.8 / 16.1
- PEG: 2.4
Analysts and Disclosure
- Analyst: Su Zhang
- Contact: +852 3189 6357 | suzhang@cmschina.com.hk
- Important Disclosures: Refer to the website for more information on disclosures and legal restrictions.
Conclusion
Wuxi Biologics is positioned as a BUY due to its favorable position in the sector rebound, strong fundamentals, and attractive valuation. The company is expected to benefit from increased late-stage projects, higher bispecific orders, and potential easing of US-China tensions. Investors should consider risks such as slow order intake and RMB appreciation.
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