Kailaiying (002821): The first quarter results are beautiful and maintain high growth!

Brief evaluation of performance The company released the report for the first quarter of 2019, and realized operating income / net profit attributable to 北京夜网 mothers / net profit attributable to non-mothers4.

76 ppm / 0.

92 ppm / 0.

80 ppm, an increase of 31 each year.

03% / 45.

00% / 51.

87%.

The income side basically met expectations and the net profit exceeded expectations.

Operational analysis The company’s main business continued to develop in the first quarter of 2019, and its ability to accept orders has been further strengthened. Orders have been executed, production has been in good condition, and revenue has been achieved4.

76 ppm, an increase of 31 in ten years.

03%, basically in line with expectations.

Expenses dropped significantly and net profit exceeded expectations.

Selling expenses, management expenses, research and development expenses basically matched the company’s revenue scale; financial expenses were extended and reduced by 77.

19%, mainly because the report caused changes in the exchange rate of the RMB to the US dollar, and reduced exchange losses.

In the first quarter, the proportion of the company’s commercialized orders increased, while the large-scale commercialized orders accounted for a high proportion of raw materials. At the same time, some order customers designated raw material suppliers, and the gross profit margin declined slightly.

We expect that the gross profit margin to be achieved will be improved: the company continues to improve its internal supply chain construction, increasing the output of key APIs, and at the same time, through continuous technological transformation, new technologies such as continuous reaction technology and enzyme catalysis technology are substituted for APIsIn the large-scale production of starting materials, intermediates and APIs, production costs have continued to decrease; starting from November 1, 2018, the state increased the export tax rebate rate, and the company’s export tax rebate rate increased by 1% as a whole; the company’s production facilities are highly versatile,Some production lines (such as Tianjin Gloria Pharmaceuticals) have adjusted their product positioning in time according to market demand, and there is room for further improvement in capacity utilization in 2019.

The domestic CDMO industry will maintain a high degree of prosperity for a long time: global industrial transfer, overseas order transfer; domestic traditional pharmaceutical companies’ transformation, increased R & D investment, and increased penetration; domestic biotechnology companies have risen rapidly, increased R & D investment, and increased penetration.

As a domestic CDMO leader, the company has strong core competitiveness and obvious first-mover advantage, and will benefit from the continuous high growth of the industry for a long time.

The company’s project echelon is reasonable, the clinical project reserves are abundant, the order loss is reduced, and the customer stickiness is replaced. This translates into the continuous advancement of customer projects and the order scale continues to increase.

The company’s project pipeline is rich, many expected new drugs and blockbuster varieties have entered the high-speed growth stage of commercialization, and the growth is highly certain. We expect that the company will continue to maintain a high growth performance of more than 30% in 2019-2021.

Profit adjustment and investment recommendations We expect the company’s EPS to be 2 in 2019-2021.

45/3.

21/4.

18 yuan, a year increase of 32% / 31% / 30%.

Maintain “Buy” rating.

Risks suggest that downstream new drug product sales are not up to expectations, upstream raw material prices are rising, exchange rate changes, environmental protection and safe production, new business expansion is not up to expectations, and core technology (business) staff turnover