The company's revenue and profit in the first half of the year were slightly lower than expected, but the revenue maintained double-digit growth under the epidemic. The company's income in the first half of 2022 increased by 15.3% year-on-year to 2.24 billion yuan (the same below), while the net loss of shareholders decreased by 5.3% to 950 million yuan. The company's main products are tumor drugs. In the first half of the year, outbreaks occurred in Shanghai, Beijing and other first-tier cities one after another, resulting in many patients unable to seek medical treatment in these cities, and the operation of hospitals in Suzhou and other places where the company's production base is located was also affected. as a result, income is slightly lower than expected but still maintains double-digit growth, and revenue from newly listed biological similar drugs has increased sharply in the past two years. Due to the increase in the proportion of revenue from biological similar drugs with relatively low gross profit margin, the company's gross profit margin fell to 78.9% in the first half of the year from 88.8% in the same period last year, resulting in a slightly higher-than-expected net loss by shareholders. We believe that the increase in revenue from bioanalogues will help to solve the company's previous problem of single products. The company's income before 2020 is mainly PD-1 drug Dabeshu, but at present there are seven commercial products, and the product pipeline is increasingly rich and conducive to long-term development.
The company expects a number of clinical trials and listing approvals to make progress in 2022-23. The company expects a number of market-focused listing approvals and clinical trials to make progress in 2022-23. We believe that if it can be realized, it will provide support for the stock price. Details include: 1) New drug listing: non-small cell lung cancer drug Zeptini may be approved 2) key clinical progress: it is expected that IBI-362 (drugs for obesity and type 2 diabetes), IBI-351 (drugs for oncology) and IBI-112 (drugs for psoriasis) will enter the critical Phase 2 clinical trials. 3) key data readout in clinical trials: preliminary data for IBI-939 (for non-small cell lung cancer), updated data for IBI-322 (for Hodgkin's lymphoma), updated data for IBI-326 (for CAR-T therapy), updated data for IBI-310 (for cervical cancer), and phase 2 clinical data for IBI-302 (for improving vision and retinal edema) are expected to be released.
Sanofi premium capital injection demonstrates the company's strong R & D and financing capabilities. The company announced earlier that it had reached a strategic cooperation with the world-renowned pharmaceutical giant SNY US, including:
1) Product licensing agreement: cooperation in the clinical development and commercialization of oncology drugs SAR408701 and SAR444245 in China; 2) Premium capital injection: Sanofi subscribed for 300 million euros of INNOVENT BIO shares at a price of HK $42.42 per share, at a premium of 20% over the average closing price of the 30 trading days before the agreement. Sanofi's premium stake and cooperation with the company to develop products demonstrate the company's strong R & D strength and financing ability.
The target price was raised to HK $41.40, with a "overweight" rating.
Due to the slightly lower revenue forecast in the first half of 2022, we have lowered our revenue forecast by 5.0% in 2022, but we believe that cancer drug sales will pick up after the epidemic has eased, so we will not adjust the 2023-24e revenue forecast. Due to the slightly lower gross profit margin in the first half of the year, we raised our shareholder net loss forecast for 2022-24 by 27.9%, 27.8% and 188.7%, respectively. However, for the rapidly expanding start-up high-tech enterprises, the market pays more attention to income performance and R & D strength. The company maintained steady revenue growth in the first half of the year in the face of a poor operating environment in the pharmaceutical industry. Sanofi premium capital injection is a higher-than-expected event, we reduced the WACC assumption in the DCF model from 8.9% to 8.3%, and raised the target price from HK $37.50 to HK $41.40.
Due to the recent rebound in the company's share price, the rating was adjusted from "buy" to "overweight".
Risk tips: (1) COVID-19 's epidemic repeatedly affected the company's production; (2) the sales of new drugs on the market were worse than expected; and (3) the progress of new drug research and development was slower than expected.