Zhaoyan New Drugs (603127) 2019 First Quarterly Report Review: Costs Increase, Short-term Profit Changes Have Been in High Growth Trend

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Zhaoyan New Drugs (603127) 2019 First Quarterly Report Review: Costs Increase, Short-term Profit Changes Have Been in High Growth Trend

Event: The company released the first quarter report of 2019, and realized 深圳桑拿网 operating income of 74.42 million yuan, an increase of 44 year by year.

13%; net profit attributable to mothers was 12.04 million yuan, a year-on-year increase of 37.

27%; net profit after deduction of non-return to mother was 4.57 million yuan, a year-on-year decrease of 18.


The main business income is growing rapidly, and the short-term profit changes brought about by the increase in costs.

Reporting averages, 1) Revenue grows by 44 per year.

13%, high growth in line with expectations, we believe that the revenue contribution is mainly from the continuous and rapid growth of the preclinical evaluation of drugs.

2) Net profit attributable to mother increases by 37 each year.

27%, net profit after deducting non-return to mothers fell 18 year-on-year.

The 13% difference is preliminary for the report to 苏州夜网论坛 initially confirm 6.16 million wealth management income and increase additional income.

3) The net profit after deduction is beyond the expected range. We believe that it is mainly affected by two aspects. ① The new clinical phase 1 and pharmacovigilance are still in the replacement period. It is expected that the report will bring about 200 replacements.The impact is not significant; ② The company recruited more than 100 employees in 2018 and reported an increase in employee costs. It is expected that the impact of increased employee costs will be more than 300 times, and the increase in production capacity and production income will increase, and the impact of increased employee costs will gradually decline.

4) Excluding the temporary decrease in new business and the increase in staff costs, we expect the company’s main business to maintain rapid growth in both the profit side and the income side.

The gross profit margin decreased slightly, and important financial indicators were good.

Report communique, the company achieved a gross profit margin of 52.

66%, down 2 each year.

77pp, we think it is mainly affected by the increase in labor costs.

The company’s sales expense ratio, management expense ratio, and financial expense ratio are 2 respectively.

90%, 36.

13%, 0.

11%, +0 compared with the same period last year.

67pp, -2.

24pp, +0.

55pp, the cost level is well controlled.

The company realized net cash flow from operating activities of 16.25 million yuan, an annual increase of 132.

0%, the absolute level and relative growth levels are significantly higher than the profit side, and the operating quality is excellent.

At the end of the reporting period, the company realized the advance receipt of funds3.

USD 7.4 billion, the growth trend is unchanged, we expect to correspond to about 900 million orders in hand, redundant orders.

The initial increase in production capacity has been put into operation, and the pre-clinical evaluation and assessment have maintained the high growth trend.

The company has been cultivating drugs for many years in pre-clinical evaluation, and its combat capability is almost full. Suzhou 1 in 2019.

The gradual commissioning of the 10,000-square-meter animal house and the 750-square-meter animal house in Beijing will bring huge performance flexibility. Full orders in hand will be released quickly, and the pre-clinical evaluation will gradually increase in high growth. At the same time, the company disclosed in Chongqing, Wuzhou, etcThe construction of a new drug evaluation center project will provide guarantee for long-term development.

In addition, the company continues to improve the overall competitiveness of the CRO field, speed up new business layouts such as pharmacovigilance and phase one clinical trials, cultivate new profit growth points, and further increase the company’s growth ceiling.

Profit forecast and investment rating: It is expected that the company’s net profit attributable to its parent from 2019 to 2021 will be 1.

6.1 billion, 2.

3 billion, 2.

97 ppm; EPS is 1.

00 yuan, 1.

43 yuan and 1.

84 yuan, corresponding PE is 47X, 32X and 25X.We are optimistic that the company is the absolute leader in the field of domestic safety evaluation. Under the high prosperity of the domestic CRO industry, the high performance growth is both explosive and sustainable.

The addition of new production capacity in 2019 will provide great performance flexibility in the next two years. The first phase of pharmacovigilance and clinical trials can continuously improve the company’s ceiling and maintain the “strong recommendation” level.

Risk warning: less-than-expected capacity expansion; adverse changes in pharmaceutical policies; less-than-expected business expansion; intensified competition in the industry, etc.