Brief performance review
On April 28, 2023, the company released the first quarter report of 2023. 1Q23's revenue was 10.871 billion yuan, an increase of 4.68% over the previous year; the net profit returned to/after deducting non-net profit was 9987/919 million yuan, up 116.17%/14.78% over the previous year. The performance was in line with expectations.
Management analysis
New products are gradually being released, and the revenue structure continues to be optimized. (1) In the first quarter of 2023, the company's net profit after deducting non-return to the parent increased by doubling the year-on-year rate, mainly due to the low base of 1Q22, which resulted in non-recurring losses of 338 million dollars due to the current decline in BNTX shares held by the company (BNTX shares held by the company were sold out in 2022). (2) Overseas sales of the company's non-proprietary public health protective materials contributed to a year-on-year decline in sales, that is, sales of mRNA COVID-19 vaccines declined year-on-year. (3) The company's net profit increased by nearly 15% after deducting non-return to the mother in 1Q23, mainly due to increased performance brought about by new and sub-new products such as slurizumab injections, injectable trastuzumab, alvatripopa maleate tablets, and azevudine tablets; the revenue structure continued to be optimized.
Indications for innovative drugs are expanding, and clinical promotion of the latest global (FIC) and best-in-class (BIC) drugs. (1) The first domestically produced potassium-ion competitive acid (P-CAB) inhibitor, keplasen hydrochloride, which was jointly opened by the company and commercialized exclusively by the company, was approved for listing in China; PD-1 slurizumab was newly approved for first-line treatment of broad-stage small cell lung cancer (ES-SCLC) indications. (2) The first patient administration was completed in an international multi-center phase 3 clinical trial of PD-1 slurizumab combined with chemotherapy and concurrent radiotherapy. It was the first Chinese and European two-batch of domestically produced trastuzumab to compete with Hanqu Excellent. The US listing application was accepted. The listing application for Botox products of Furui Medical Technology, a holding subsidiary of the company, was accepted in China. (3) The company purchased Chengdu Fosun Antekin for 4 billion yuan in 2021. The 13-valent pneumonia tuberculosis vaccine is in clinical phase 3; on February 3, it obtained a national “Pharmaceutical Production License” to lay the foundation for commercialization of its subsequent vaccine products.
New progress has been made in the internationalization of medicine, injectables and innovative drugs. (1) Furui Medical Technology, a holding subsidiary of the company, achieved the direct sales layout of the energy source medical and aesthetic equipment business in the Chinese market through the asset merger and acquisition of “Feidon”. (2) Gland Pharma, an Indian subsidiary of the company, acquired Cenexi to complete the strategic layout of the CDMO business in the European market. (3) Through cooperation with BostonOnCology, the subsidiary Fuhong Hanlin granted exclusive rights to develop and commercialize rituximab injections in 16 emerging markets in Asia and Africa to expand the Asian and African markets.
Profit Forecasts, Valuations, and Ratings
Considering that innovative drugs are expected to continue to contribute to increased performance, we expect revenue of 516/594/68.5 billion yuan in 2023/24/25, an increase of 17%/15%/15% over the previous year; the net profit of the mother was 46/54/6.5 billion yuan, an increase of 23%/19%/20% over the previous year. Maintain a “buy” rating.
Risk warning
Risks such as new product development and sales falling short of expectations, increased risk of product competition, risk of falling short of expectations when going overseas, and risk of price reduction in the collection of bioinnovative drugs.