20220526-招银国际-石药集团-01093.HK-Smooth_progress_in_mRNA_COVID-19_vaccine_4页_914kb

CSPC Pharmaceutical (1093 HK) Company Update Summary

Core Content

CSPC Pharmaceutical (1093 HK) has reported its 1Q22 earnings, showing a smooth progress in its operations and strategic initiatives, including the development of its mRNA COVID-19 vaccine, SYS6006. The company's financial performance and growth prospects are under review by CMB International Global Markets (CMBIGM), which has maintained a BUY rating with a target price of HK$13.20.

Key Financial Highlights

1Q22 Earnings

• Revenue: RMB7.87bn, up 16.9% YoY, representing 26% of the full-year estimate.
• Finished drugs: RMB6.30bn, up 15.0% YoY.
• Bulk products: RMB1.15bn, up 25.6% YoY.
• Attributable net profit: RMB1.40bn, down 4.6% YoY, primarily due to a RMB132.60mn fair value loss on financial assets.
• Recurring profit: RMB1.54bn, up 10.3% YoY.
• R&D expenses: RMB901.52mn, up 30% YoY, reflecting CSPC's commitment to innovation.

Revenue and Profit Growth Projections

Valuation

• DCF-based target price (HK$): 13.20
• Current price (HK$): 7.84
• P/E ratio (FY22E): 21x
• P/B ratio (FY22E): 3.4x
• ROE (%): 20.8 (FY22E)
• Net gearing (%): Net cash
• Market Cap (HK$ mn): 93,556
• Avg 3 mths t/o (HK$ mn): 301.15
• 52w High/Low (HK$): 12.68 / 7.28

Product Performance and Development

• New Product Sales:
  • Oncology products: +15.4% YoY
  • Anti-infective products: +28.4% YoY
  • NBP: Sales grew by ~7.4% YoY due to strong channel penetration.
• Mingfule (rhTNK-tPA): Launched in Feb 2022, has entered 620+ hospitals as of Apr 2022 and is expected to expand further.
• Duoenda (mitoxantrone hydrochloride liposome injection): Approved in Jan 2022.
• COPIKTRA (duvelisib capsule): Approved in Mar 2022.
• Irinotecan liposome: Filed NDA in Apr 2022.
• SYS6006 (mRNA vaccine):
  • IND approval: April 2022
  • Phase I data: Expected in July 2022
  • Phase II study: Expected to start soon
  • FPI completion: Expected in June
  • Manufacturing capacity: 500mn doses, with potential to double by end of 2022

Analyst Ratings and Reports

• Ratings:
  • BUY: Potential return of over 15% over next 12 months
  • HOLD: Potential return of +15% to -10% over next 12 months
  • SELL: Potential loss of over 10% over next 12 months
• CMBIGM Rating: BUY

Risk-Adjusted DCF Valuation

• WACC: 11.78%
• Terminal growth rate: 3.00%

Shareholding and Performance

• Shareholding Structure:

  • Management: 23.68%
  • UBS Group: 7.34%
  • Common Success Intl: 6.09%
  • Free float: 62.89%

• Share Performance:

  • 1-month: -2.2%
  • 3-months: -15.2%
  • 6-months: -4.9%
  • 12-months: -3.7% (relative)

Key Ratios

• Sales mix:
  • Finished drugs: 81.7% (FY22E)
  • Bulk medicines: 18.3% (FY22E)
• Profit & loss ratios:
  • Gross margin: 75.00%
  • EBITDA margin: 27.8%
  • Pre-tax margin: 25.2%
  • Net margin: 20.6%
• Balance sheet ratios:
  • Current ratio: 3.2 (FY22E)
  • Trade receivables turnover days: 91
  • Trade payables turnover days: 348
  • Inventory turnover days: 130
• ROE: 20.8% (FY22E)
• ROA: 15.8% (FY22E)

Financial Statements Summary

• Income Statement:

  • Revenue: RMB30,735 (FY22E)
  • Gross profit: RMB23,051 (FY22E)
  • Operating profit: RMB7,687 (FY22E)
  • Net profit: RMB6,336 (FY22E)
  • EPS (RMB): 0.53 (FY22E)

• Cash Flow Summary:

  • Net cash from operating activities: RMB7,269 (FY22E)
  • Net cash from investing activities: RMB-1,000 (FY22E)
  • Net cash from financing activities: RMB-2,012 (FY22E)
  • Net change in cash: RMB4,256 (FY22E)

• Balance Sheet:

  • Total net assets: RMB31,344 (FY22E)
  • Shareholders' equity: RMB30,422 (FY22E)
  • Cash at the end of the year: RMB13,540 (FY22E)

Conclusion

CSPC Pharmaceutical is experiencing steady revenue growth and is actively expanding its product portfolio with promising new drug launches and the advancement of its mRNA vaccine. Despite a net profit decline in 1Q22 due to a fair value loss, the company's recurring profit and R&D investment are positive indicators. The BUY rating suggests strong growth potential, with a DCF-based target price of HK$13.20, indicating a valuation of 21x FY22E P/E. The company's financial health and strategic focus on innovation and expansion position it well for future performance.