1Q22 attributable NP grew 57% yoy to HKD303mn, reaching 23% of our full year forecast of HKD1,277mn
Co. maintain upbeat guidance for FY22E rev of HKD8.5bn (up 58% yoy), and bulk pharmaceuticals will be the main driving force
TP unchanged at HKD5.1. Maintain BUY on Co.’s attractive risk/reward (7x FY23E P/E) and new exciting growth driver
　　Strong 1Q22 results
　　1Q22 sales grew 41% yoy to HKD1,733mn. IV infusion portfolio grew 26% yoy to HKD947mn (+22% yoy in RMB term), mainly driven by IV sales volume (+19%) and higher mixed ASP (+6%). Bulk pharmaceuticals grew 267% yoy to HKD347mn, mainly driven by caffeine bulk pharmaceuticals sales (increased significantly by over 7 times). We expect the strong growth for bulk pharmaceuticals to continue in FY22E given caffeine export price surged from USD9.8/kg in Sep ’21 to USD17.5/kg in Mar ’22. Ampoule injection sales remained soft +7% yoy to HKD318mn (+3% yoy in RMB term), reflecting continued VBP pressure. Overall GPM down 5.2ppt to 58.8% due to changes in sales mix that included an increased sales contribution from its lower margin business of bulk pharmaceuticals. Attributable net profit in 1Q22 grew 57% yoy to HKD303mn driven by strong sales and lower selling expense ratio.
　　On track to deliver a strong FY22E
　　Mgmt. maintained strong guidance for FY22E, with revenue target of HKD8.5bn and similar growth trend for its bottom line (up 58% yoy). This is supported by upbeat bulk pharmaceuticals guidance (HKD2.2bn sales, up 3x yoy, accounted for 26% of FY22E total revenue). We reckon ~HKD900mn caffeine sales in FY22E given 1) higher caffeine export price (USD17.5/kg as of Mar ’22) likely to persist in FY22E due to global inflation and 2) full-year caffeine shipment of 7k ton. Meanwhile, we reckon Co.’s IV infusion (accounted for 47% of FY22E total revenue) is on track to deliver 20%+ yoy in full year basis given robust 1Q22 sales (+26% yoy).
　　Maintain BUY, SOTP-based TP unchanged at HKD5.1
　　We left FY22E/23E earnings forecast unchanged. We maintained our SOTP-based TP at HKD5.1. With ~40% earnings CAGR outlook in FY21- 23E, current valuation trading at 7x FY23E P/E with 4% FY23E div yld, offering attractive risk/reward in our view. Investment risks: VBP, COVID- 19, price fluctuation of raw material, etc.