20201103-招银国际-泰格医药-300347.SZ-Further_recovery_in_3Q_4页_909kb

Tigermed (300347 CH) Company Update Summary

Core Content

Tigermed, a leading clinical research organization (CRO) in China, reported strong financial performance in the third quarter of 2020 (3Q20), with significant revenue and net profit growth. The company's operations were previously impacted by the pandemic, but recovery has been observed as the situation improved in China. The earnings growth is attributed to both topline expansion and margin improvement, with the consolidation of acquired companies like MOSIM and Yaxincheng playing a key role in the gross margin increase.

Key Financial Highlights

• Revenue (3Q20): RMB848mn, up 22.3% YoY
• Attributable Net Profit (3Q20): RMB319mn, up 81.4% YoY
• Adjusted Net Profit (3Q20): RMB195mn, up 29.4% YoY
• Gross Margin (3Q20): Improved by 2.89ppts compared to 3Q19

Main Points

1. Recovery from Pandemic Impact

• Tigermed's operations were disrupted by the pandemic in 1H20.
• Domestic revenue started to recover from 2Q20 due to improved conditions in China.
• Overseas operations faced challenges due to the worsening pandemic in the US and Europe, affecting demand for services like data management and Frontage's CRO services.
• The company expects the pandemic to ease in 2021E with vaccine availability, leading to further business recovery.

2. H-share IPO and Global Expansion

• Tigermed completed its dual-listing on HKEX in August 2020, raising HK$11.82bn in net proceeds.
• The IPO provides sufficient capital for global expansion through acquisitions and self-expansion.
• The company is well-positioned to support both Chinese and international pharmaceutical companies in MRCTs, leveraging China's large patient pool.

3. Earnings Forecast and Valuation

• CMB International Securities raised its 2020E and 2021E net profit forecasts by 90% and 17%, respectively.
• The target price was raised to RMB146.43, implying a 70x FY22E P/E ratio.
• The company maintains a "BUY" rating, highlighting its strong market position and growth potential.

Financial Summary

Revenue

Net Profit

EPS

Valuation Metrics

SOTP Valuation (2022E)

Shareholding and Performance

• Shareholding Structure:

  • Management: 37.11%
  • Temasek: 2.92%
  • Free float: 59.97%

• Share Performance:

  • 1-month: +20.4%
  • 3-months: +15.1%
  • 6-months: +61.0%

• Market Cap: RMB105,317 mn

• Avg 3 mths t/o: RMB675.68 mn

• 52w High/Low: RMB130.50 / RMB59.00

Key Ratios

• Sales Mix:

  • Clinical trial technical services: 48%
  • Clinical trial consulting services: 52%

• Profit & Loss Ratios:

  • Gross margin: 43% to 48%
  • EBITDA margin: 29% to 62%
  • Pre-tax margin: 26% to 57%
  • Net margin: 21% to 48%
  • Effective tax rate: 16% to 10%

• Balance Sheet Ratios:

  • Current ratio: 1 to 7
  • Trade receivables turnover days: 112 to 110
  • Trade payables turnover days: 11 to 28
  • Net debt to equity ratio: Net cash

• Returns:

  • ROE: 17% to 10%
  • ROA: 12% to 9%

• Per Share Metrics:

  • EPS: 0.94 to 2.10
  • DPS: 0.35 to 0.52
  • BVPS: 5.34 to 20.63

Conclusion

Tigermed is well-positioned for continued growth, supported by its strong domestic recovery, strategic global expansion, and recent capital raising. The company's improved financial performance and valuation suggest a positive outlook, with a "BUY" recommendation and a target price of RMB146.43.