Key points of investment

The performance forecast for the first quarter exceeded expectations: the company released a performance forecast for the first quarter of 2023. It is expected to achieve revenue of 906 million yuan (+38%), net profit of 292 million yuan (+60%) after deduction, and net profit of 303 million yuan (+73%) to the mother, and achieve rapid growth in performance. It is estimated that the core variety of new active substances continues to be released rapidly. The estimated revenue growth rate is over 40%, and the revenue share has further increased to over 90%. The 2023 business plan target is to achieve revenue of 3.5 billion yuan, an increase of 37% over the previous year, and is expected to be successfully achieved.

The efficacy of the new active hormone is accurate. It is included in the heart failure diagnosis and treatment guidelines and national health insurance catalogue. The main mechanism of action of neoactivin is to dilate blood vessels to reduce the burden on the front and back of the heart. It can also expand the entricular arteries of the glomeruli and inhibit the reabsorption of sodium in the proximal tubule, increase glomerular filtration rate, enhance sodium excretion, and produce obvious diuretic effects. The novel active hormone can quickly improve the symptoms and signs of heart failure in patients with heart failure, improve the quality of life of patients, and is highly recognized clinically.

There are more than 12 million heart failure patients, with a prevalence rate of about 1.1%: Health insurance statistics for 50 million workers aged 25 and above in 6 provinces of China in 2017 show that the prevalence of heart failure in China is about 1.1%, and it is estimated that the number of patients with heart failure exceeds 12 million. The prevalence of heart failure increases with age. The prevalence of people aged 25-64/65-79/≥80 is 0.57%/3.86%/7.55%, respectively. The accelerated aging process in China will drive the number of heart failure patients to continue to expand. A total of 518,400 cases of heart failure were detected in a sample of 50 million cases in 2017. Of these, 132,300 were hospitalized. The proportion of those hospitalized 1/2/3 or more times was 40.2%/19.3% 40.5%, respectively. The average number of hospitalizations per person per year was about 2 times. It was expanded to 12 million heart failure patients nationwide, and the number of hospitalizations per year is expected to exceed 6 million. Based on the calculation of the average use of 4 sticks of the new active substance per person, based on the 2/3 penetration rate estimate, the peak sales volume is expected to reach 16 million sticks in the future.

Investment advice: Considering that the company's 23-year performance progress exceeded expectations and maintained profit forecasts, the company's net profit for 2023-2025 is estimated to be 991/13.33/1,730 million yuan respectively, with a growth rate of 168%/35%/30% respectively, and corresponding PE 14/10/8 times respectively. Maintain a “buy” rating.

Risk warning: Product sales fall short of expectations, risk of product price reduction.