WuXi PharmaTech (603259) 2018 Annual Report Comments: Rapid Growth in Domestic Revenue Meets Expectations

WuXi PharmaTech (603259) 2018 Annual Report Comments: Rapid Growth in Domestic Revenue Meets Expectations
In 2018, the company realized revenue, net profit, and deducted non-net profit 96.14 billion, 22.6.1 billion and 15.59 trillion, +23 a year.80%, +84.22%, +59.18%.Performance is in line with expectations. Revenue and net profit grew steadily, and results met expectations.In 2018, the company realized revenue, net profit, and deducted non-net profit 96.14 billion, 22.6.1 billion and 15.59 trillion, +23 a year.80%, +84.22%, +59.18%.The rapid increase in net profit was mainly due to the one-time calculation of fair value gains in 20186.0.6 million yuan, and the increase in asset impairment in 2017 compared to 20181.40,000 yuan (if the above factors are not taken into account, the net profit growth rate is 28%), the rapid growth of non-net profit is mainly due to the decrease in government subsidies in the non-recurring profit and loss government in 2018 by 1.1.5 billion, also reflects the improvement of the company’s profit quality.Overall, the company’s revenue and profit growth in 2018 was in line with expectations. Domestic business, high clinical CRO growth.In 2018, China’s CRO, CDMO, US laboratory and clinical CRO achieved revenue of 51.1.3 billion, 26.9.9 billion, 12.04 billion and 5.85 ppm, which is expected to exceed 25 if exchange rate changes are not considered.7%, 30.4%, 8.4% and 64.2%.We believe that the growth in domestic demand for new drug development is an important reason for the rapid growth of CRO, CDMO and clinical CRO revenue in China.The company’s domestic revenue growth in 2018 reached 55.5%, far more than the United States and Europe18.2%, 6.7% growth. In the United States, revenue is expected to accelerate in 2019.In 2018, the US business was affected by changes in the medical device business. Revenue growth and gross profit margin shortened significantly (revenue growth decreased by 15pcts and gross profit margin decreased by 8pcts). However, through the release of cell and gene therapy business capacity in the US, weIt is believed that the US region’s revenue is expected to accelerate in 2019 and it is expected to return to a growth rate of more than 20% (the growth rate of the cell and gene therapy business in the second half of 2018 is 28.4%, revenue accounted for 70% of the expected), gross profit margin is also expected to gradually rise. The construction 无锡夜网 of the medical ecosystem was further improved.In outbound mergers and acquisitions, the company has successively acquired large high-quality companies such as AppTec, Biotech, Crelux, and Huiyuan Bio. Among them, American clinical CRO company ResearchPoint Global, which was acquired in July 2018, is committed to building the company’s Sino-US clinical dual reporting capabilities.At the same time, the company has strengthened its data capacity building. In 2018, the company established CLP Wuxi Heming and doctor education platform Yunyang Medical.We believe that the company’s layout of big data business is in line with the global CRO industry development trend (Quintech / IMS merger, ICON / IBM Watson cooperation, PRAH acquisition of Symphony, etc.). Although there is short-term pressure, it is expected to become an important 杭州桑拿 competitive advantage in the future. Risk factors: The R & D investment of pharmaceutical companies is lower than expected; the financing of biotechnology companies is lower than expected. Maintain “Buy” rating.The company is a leading domestic pharmaceutical R & D and production outsourcing company. At present, the domestic CRO industry has a high degree of prosperity, and the company’s integrated layout has obvious competitive advantages.The combined company’s annual report assumes that gains from changes in fair value from 2019 to 2020 increase by one.50,000 yuan, considering the profit distribution plan for every 10 shares to pay a cash dividend of 5.8 yuan and increased 4 shares, adjusted EPS forecast for 2019-2021 to 1.26/1.61/2.00 yuan (the original forecast was 2.59/3.25 yuan, supplementary forecast in 2021), corresponding to PE55 / 43/35 times, maintain “Buy” rating.

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