Zhaoyan New Drug (603127) three quarterly report tracking: Q3 growth forecast is not hindering vertical high growth expectations

04/04/2020 0 Comment

Zhaoyan New Drug (603127) three quarterly report tracking: Q3 growth forecast is not hindering vertical high growth expectations


Event: The company released three quarterly reports for 2019.

The first three quarters of 2019 achieved operating income3.

48 ppm, an increase of 42 in ten years.

95%; net profit attributable to mother is 7,648.

310,000 yuan, an increase of 33 in ten years.

66%; net profit deducted from non-mothers was 6036.

11 million yuan, an increase of 38 in ten years.

95%; EPS 0 achieved.

47 yuan.

Among them, the third quarter of 2019 achieved a single quarter of operating income1.

48 ppm, an increase of 35 in ten years.

86%; net profit attributable to mother was 3634.

690,000 yuan, an increase of 4 in ten years.

50%; net profit deduction for non-attributed mothers 3172.

790,000 yuan, an increase of 12 in ten years.

73%; EPS 0 achieved.

23 yuan.

For other financial indicators, sales expenses were 805.

600,000 yuan, an increase of 90 in ten years.

44%; management expenses 6437.

250,000 yuan, an annual increase of 20.

83%; finance costs -219.

840,000 yuan, an annual increase of 26.

96%; R & D expenses are 2674.

440,000 yuan, an increase of 47 in ten years.


Accounts receivable 6757.

880,000 yuan, an increase of 74 from the end of the previous period.

44%, mainly due to the increase in the report’s leading provision of labor services.

Net operating cash flow 9725.

640,000 yuan, a decrease of 20 per year.



Our analysis and judgment (1) Affected by factors such as increased labor costs and rising animal prices, the growth rate of the profit side of Q3 is lower than that of the income side.

The company achieved revenue in the first three quarters of 20193.

4.8 billion (+42.

95%), and realized net profit of 7,648.310,000 yuan (+33.

66%), deducting non-attributed net profit of 6036.

110 thousand yuan (+38.


Among them, Q3 achieved revenue in a single quarter1.

4.8 billion (+35.

86%), achieving net profit of 3634.

690,000 yuan (+4.

50%), deducting non-attribution net profit 3172.

RMB 790,000 (+12.


The growth rate of the profit side of Q3 is lower than that of the income side. We believe that the following should be followed: (1) the increase in labor costs, Q3 the company added nearly 200 employees in a single quarter; (2) the increase in animal prices brought about a reduction in gross profit margin;Amortization of equity incentive expenses; (4) New business (pharmacovigilance, clinical business, Wuzhou Monkey Farm, etc.) is still in the outbreak period and there are possible situations; (5) Depreciation impact of new animal houses.

During the period, expenses were well controlled and operating cash flow improved.

The expense ratio during the first three quarters was 27.

83%, down by 1 every year.

99pp, period cost is well controlled.

In breakdown, the selling expense ratio is 2.

31% (+0.

58pp), management expense ratio 18.

47% (-3.

38pp), R & D expense ratio 7.

68% (+0.

21pp), financial expense ratio -0.

63% (+0.


In terms of cash flow, operating cash flow for the first three quarters was 9725.

640,000 yuan, a decrease of 20 per year.

11%, we believe that the main reason is the increase in human costs and animal prices.

(II) Capacity Expansion + Staff Expansion + Excessive Orders on Hand, High Growth and Expected Performance The company, as an in-house pre-clinical R & D outsourcing leader, continues to expand production capacity, continuously strengthens the construction of personnel teams, and has a large number of orders in hand, so as to achieve high growth.
In terms of production capacity, Suzhou Zhaoyan added 1.

The 08,000-square-meter animal room has been put into use, greatly improving service throughput and capacity.

The Zhaoyan Animal House in Beijing has been refurbished and put into use within six months to ease the tight production situation.

In addition, the company is located in Wuzhou, Guangxi, and plans to build an international biomedical research, vaccine, effect evaluation technology platform, and international cooperation platform. The site planning and design have been completed and construction started on April 1.

In terms of personnel team, the company continued to expand its personnel team. The number of employees reported was close to 1,000.

The company optimizes the organizational structure, improves management efficiency, improves the budget system, and expands fair incentives. It actively explores foreign talent markets and builds an international and professional talent team.

In addition, the company organizes internal training and assessment of the system to improve the professional technical ability and quality awareness of employees.

In terms of orders, the company has too many orders in hand and its subsequent performance is guaranteed.

At the same time, outstanding orders increased significantly, and the company’s inventory at the end of the reporting period2.

19 trillion, an increase of 90 compared to the beginning of the period.

At 75%, the company has a large number of unsettled orders. It is expected that revenue will be recognized in Q4 or early next year. High future growth is expected. (III) Steady progress in the extension of the industrial chain, the acquisition of Biomere to accelerate the deployment of international companies, and actively expand their business areas, and the early clinical and pharmacovigilance business has steadily advanced.

In terms of early clinical business, there are currently three bases in Taicang, Tonghua and Hainan Cancer Hospital, which can carry out clinical projects and grasp the quality of the projects.

At the same time, Beijing has a clinical sample analysis department, and Taicang has recruited returnee experts. It is currently in the stage of establishing a clinical sample analysis team.

It is expected that the three hospital bases and the Taicang clinical sample analysis center will be completed and used by the end of the year.

As for the pharmacovigilance business, Zhao Yanming has established pharmacovigilance cooperation relationships with enterprises of different sizes, including central enterprises, joint ventures, R & D enterprises, and listed companies.

The company’s clinical phase I and pharmacovigilance business are steadily advancing. It is currently in the early expansion stage and has a small income volume. It is expected to be in a break-even state for a long time.

Acquired American CRO company to accelerate the internationalization of the layout.

The company plans to acquire 100% equity of American Biomere for US $ 27.28 million, and is expected to complete the delivery at the end of the year.

Biomere is a mature pre-clinical CRO company in the United States, with a mature management model and high-quality customer resources.

We believe that the company’s acquisition of Biomere will have experimental facilities in the United States, and gradually improve the local order digestion of international orders, which will help the company improve the US market layout, expand the company’s influence in the US market, and further improve its performance in the future.


Investment suggestion that the company’s growth rate in the third quarter is short-term, but there are a large number of unsettled orders, and high growth performance can be expected.

The company is an absolute leader in the field of pre-clinical safety evaluation of domestic pharmaceutical outsourcing, and is the only professional pre-clinical CRO company in China with two GLP institutions.

To improve, the company continued to expand production capacity, continuously strengthened the construction of its personnel team, and had too many orders in hand to ensure sustainable growth in performance.

At the same time, the company actively expands its business areas and enhances its overall competitiveness. The early clinical and pharmacovigilance business has steadily advanced. The acquisition of Biomere has accelerated the internationalization of the layout, and it is expected to bring new performance increases in the future.

In addition, the pharmaceutical outsourcing industry is highly prosperous and the market demand is constantly expanding.

We are optimistic that the company will maintain a rapid growth as a leader in preclinical safety assessment expansion. It is estimated that the net profit attributable 杭州夜网 to mothers will be 1 in 2019-2021.



93 trillion, corresponding to 0 EPS.



81 yuan, corresponding to PE is 64/46/34 times.

Maintain the “Recommended” level.


Risks prompt increased competition in the industry; risk of loss of core technical staff; capacity expansion is less than expected.