Key points of investment
Harvesting dividends drove domestic pharmaceutical sales to double, and the 2023 H1 performance turned a loss into a profit. In 2023, the company's H1 achieved operating income of 1,230 million yuan, an increase of 47.31% over the previous year; realized net profit attributable to parent of 134 million yuan, compared to -198 million yuan in the same period last year; realized net profit of 102 million yuan after deducting non-return net profit of 102 million yuan, compared to -209 million yuan for the same period last year. Under the dividend of collection and selection results and implementation, the sales volume of the company's domestic insulin preparation products increased by 104.74% year-on-year in the first half of 2023.
Overseas revenue has increased sharply, and overseas pharmaceutical exports are progressing as scheduled. In the first half of 2023, international sales revenue was 108 million yuan, an increase of 384.07% over the same period last year. Currently, the company's BLA applications for three types of insulin injections, Glycine, Lai Pao, and Mendong, have been accepted by the US FDA one after another, and have entered the substantive review stage.
Make every effort to promote clinical drug research and create new ways to treat diseases. 1) In August 2023, the company completed the administration of the first phase IIb clinical trial with GZR18 as an indication for type 2 diabetes; 2) In April 2023, the company completed the first phase Ib clinical trial in which GZR4 was given multiple doses of GZR4 in type 2 diabetics; 3) Other products also include GZR101, a novel premixed double insulin compound preparation, and GLR1023, a similar antibiotic drug for GZR1023.
The company plans to raise capital from Mr. Gan Zhongru. Currently, it is proceeding as scheduled: the company plans to issue no more than 28.508.5 million shares (including principal amount) to Mr. Gan Zhongru, the controlling shareholder and actual controller of the specific target company. The total amount of capital raised is expected to not exceed 773.1519 million yuan.
Profit prediction and valuation: As the first Chinese enterprise in China to successfully develop, produce and industrialize recombinant insulin analogues, the company has long been in a leading position in the domestic third-generation insulin industry. Its competitiveness in the international market continues to improve, and is expected to usher in new performance growth points. At the same time, based on the intensification of competition in the domestic diabetes medication pattern and the situation where insulin has already been collected, we adjusted our profit forecast for the company. We expect the company's EPS 2023-2025 to be 0.54, 1.03, and 1.86 yuan respectively. The corresponding PE for the stock price on August 28, 2023 will be 76.4, 40.2, and 22.3 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: insulin sales fall short of expectations; new product development progress is slower than expected; overseas market development falls short of expectations; risks related to centralized procurement, risk of public health and international relations events