Core views:
The company disclosed its 2022 annual report: it achieved annual revenue of 43.952 billion yuan (YoY +12.66%) and net profit of 3.731 billion yuan (YoY -21.10%). Affected by changes in the fair value of financial assets such as BNTX held by the company, the company's non-recurring profit and loss in 2022 was -142 million yuan, a year-on-year decrease of 1,593 million yuan. By sector, pharmaceuticals, medical devices, medical diagnostics, and healthcare services achieved revenue of 30.812 billion yuan (YoY +6.60%), 6.949 billion yuan (YoY +17.03%), and 6.080 billion yuan (YoY +47.64%), respectively.
The commercialization of new products went smoothly, and the product structure of the pharmaceutical business was optimized. Benefiting from the launch of new products such as Hans, Jebeian, Han Qu You, and Su Kexin, and revenue from the release of sub-new products, the company's sales of new and sub-new drugs grew rapidly in 2022, up more than 20% year-on-year, accounting for more than 30% of the pharmaceutical business.
Investment in innovation continues to increase, and new drug pipelines are progressing smoothly. (1) The company has set up an innovative pharmaceutical division to increase investment in innovation and improve the quality and effectiveness of R&D. In 2022, the company invested 5.885 billion yuan (YoY +18.22%), R&D expenses amounted to 4.302 billion yuan (YoY +12.12%), and currently has 3,646 R&D personnel (YoY +27.97%). (2) The company continues to promote the transformation and implementation of innovative products. In 2022, a total of 7 innovative drugs were marketed, and 4 innovative drugs were declared for listing. (3) Independent development+cooperative development+license introduction+deep incubation. The company continuously enriches the innovative drug pipeline through diversified and multi-level cooperation models. The company is currently developing 63 innovative drug projects, including 4 in the marketing application stage and 15 in clinical phase III.
Profit forecasts and investment recommendations. We expect the company's EPS to be 1.72 yuan/share, 2.03 yuan/share, and 2.38 yuan/share in 23-25, respectively. Referring to the valuations of comparable companies and considering the overall valuation adjustments of the industry, we lowered the company's reasonable value, giving A shares 26 times the PE valuation in 2023, corresponding to a reasonable value of about 44.77 yuan/share; giving Hong Kong stocks 16 times the PE valuation in 2023, the corresponding reasonable value was HK$31.46 per share, maintaining the “buy” rating.
Risk warning. The progress and sales of innovative drugs fell short of expectations, the risk of price reduction in drug collection, etc.