Revenue continues to grow at a high speed, innovative pipelines build foundation
The company disclosed its 1H23 performance on August 21: revenue of 3.38 billion yuan (+ 25.2% yoy) and net profit of 2.27 billion yuan (+ 3466.2% yoy). The non-operating factors for the substantial increase in net profit include: 1.15 billion yuan of fair value of the investment portfolio, 790 million yuan of one-time income from the disposal of subsidiaries, and estimated adjusted net profit of about 400 million yuan, similar to that of 1H22. We maintain the "buy" rating with an estimated 2023-2025 net return of 3.660 million RMB 1.631 billion, corresponding to the adjusted net profit of 8.2 billion 1.23 trillion. Based on the SOTP method (non-COVID-19 / COVID-19 business valuation of 27.19 billion RMB), the target price is adjusted to HK $11.04 (previous value: HK $19.85), mainly due to: 1) changes in COVID-19 's disease characteristics. 2) Xianbixin, envalizumab, troxilide and sublingual tablets will be approved soon; 3) the sales expense rate is expected to continue to decline, and the short-term release rate of some newly approved drugs may be adjusted slightly.
Innovative drugs drive rapid growth of performance
1H23's share of innovative drug revenue has further increased to 71.4%, which has become the main driving force of the company's revenue growth: 1) the oncology sector is expected to accelerate the volume, and Envoli monoclonal antibody to 4M23 is included in 6 CSCO guidelines; troxil is expected to complete the local transfer within 24 years. 2) the field of CNS is expected to start the second curve, and the sublingual tablet NDA has been accepted by 6M23 and is expected to be approved in 24 years. Xianbi Xin currently covers more than 4200 hospitals, with a 22% market share of stroke injection, and explores the potential for the treatment of AIS in phase III clinical and real-world studies. 3) benefiting from the autoimmune market dividend, Elamod quickly filled the vacancy. 4) Sinoxin submitted its application for full approval in August, which is expected to further improve accessibility.
Preferred differentiated track BIC/FIC products
As of 8M23, there are more than 60 innovative drug pipelines, of which 19 are in clinical development stage, with ingenuity in the selection of targets and indications. In addition to Xianbixin sublingual tablets, other commercial and post-clinical pipelines are also progressing steadily: 1) NDA for trasilide for 1L ES-SCLC is accepted by 8M23 and is expected to be fully approved in 23 years; 2) Suviximab combined with chemotherapy for platinum-resistant ovarian cancer is expected to be submitted to NDA;3 at the beginning of 24) Dalilay, which was introduced from Idorsia, was born in 7M23 and is expected to be submitted to NDA in 24 years. Continuous early clinical progress: 1) Phase I clinical approval of SIM0278 (IL-2/Fc fusion protein) in 7M23 for the treatment of AD; 2) Phase I clinical approval of SIM0237 (PD-L1/IL15v double antibody) in 7M23 for treatment of NMIBC.
The rate of sales expenses continues to decline and the gross profit margin is adjusted slightly.
The gross profit margin of 1H23 is 75.8%, which is lower than that of 1H22 by 3.6pct. In the future, the production scale of new varieties will be expanded, and the gross profit margin after real estate is expected to recover. The annual sales / management / R & D expenses of the company in 1H23 are respectively 12.5 × 10 ~ 780 million, and the corresponding expense rates are 36.9 ~ 7.6 ~ 23.0% respectively, in which the rate of sales / R & D expenses is lower than that of 1H22 years by 1.2/1.2pct, which is further based on the effectiveness of 22-year control fees.
Risk tips: the marketing of innovative drugs is slower than expected; the progress of clinical trials and approval is slow or failed; and the sales of new crown drugs are not as expected.