机构:招银国际
研究员:Jill WU/Benchen HUANG
Demand experiencing meaningful recovery in 1Q24. According to mgt., 1Q24 contract signings rebounded to double-digit growth, with Mar showing an acceleration compared to Jan and Feb. The upward trend has persisted into April. Specifically, orders from MNC and domestic pharma clients contributed to a notably larger proportion in total orders while orders from the U.S. and Australia remain robust. Encouragingly, there are signs of recovery in orders from domestic biotech firms, thanks to the recovery of biotech funding. Tigermed’s BD team will continue to focus on exploring opportunities from MNC and domestic pharma clients.
Strengthening cost control. Tigermed plans to continue its cost control on SG&A expenses and GPM optimization. Mgt. indicated that, with its asset- light business model, Tigermed possesses ample leverage on cost controls, which, for instance, include increasing the utilization of decentralized clinical trial (DCT) platforms (applied in ~20% projects as compared with ~17% by end-2023), establishing integrated teams within specific therapeutic areas, and reallocating personnel across departments as needed.
Globalization remaining a high priority. In the global market, Tigermed strategically serves Chinese companies targeting global market, as well as overseas local clients with limited access to international CRO services. The company has recruited a local BD team in the U.S and is currently engaged in multiple projects with U.S. local clients. Tigermed intends to further expand team sizes in the U.S. and India to enhance its global operation.
Maintain BUY. We trim our TP from RMB68.57 to RMB66.82, based on a 10-year DCF model (WACC: 10.95%, terminal growth: 2.0%), to factor in the slower earnings projection and uncertainties in demand recovery pace. We forecast Tigermed’s revenue to grow 11.3%/ 16.2%/ 20.6% YoY and attributable recurring net income to grow 11.9%/ 20.8%/ 25.6% YoY in 2024E/ 25E/ 26E, respectively.