Event: the company released its three-quarter report in 2023, with revenue of 1.46 billion yuan in the first three quarters, an increase of 28% over the same period last year, a net profit of 369 million yuan, an increase of 84%, and a net profit of 411 million yuan, an increase of 69% over the same period last year. The single Q3 company achieved revenue of 556 million yuan, an increase of 30% over the same period last year, a net profit of 167 million yuan, an increase of 150%, and a non-return net profit of 178 million yuan, an increase of 92% over the same period last year.
The cost and expense is well controlled, and the profit margin is improved obviously. In 2023, Q1-Q3 's quarterly net interest rate was 20.07%, 24.37% and 29.98%, respectively. The profit margin has improved significantly. It is expected that the increase in the company's profit margin is mainly due to the decline in sales expense rate and the increase in gross profit margin, in which the sales expense rate Q1-Q3 is 44.39%, 46.85% and 34.05% respectively, and the sales expense is well controlled. The gross profit margin Q1-Q3 is 91.00%, 94.61% and 94.64% respectively, which is expected to be mainly due to the fact that the company will no longer pay the patent royalty fee to Jiankai after the patent expires on March 11, 2023 (the prospectus reveals that the patent royalty fee paid to Jiankai from 2016 to 2018 accounted for 2.8%, 2.9% and 3.7% of sales, respectively).
The main product Paigebin continuous volume, long-term white drug performance contribution can be expected. After Roche's similar competitor Piroxin withdrew from the Chinese market at the end of 2022, pigebin became the only long-acting interferon product in the market. Superimposed with the Chinese guidelines for the Prevention and treatment of chronic Hepatitis B (2022 edition), it is clear that patients with chronic hepatitis B can consider using pegylated interferon alpha to pursue clinical cure and other positive factors, and the market demand for piogubin is increasing rapidly. In addition, the company's long-acting whitening drug Tuopeifei Gestine injection was approved for listing on June 30, 2023, and is expected to participate in this year's health insurance negotiations, which, if approved, is expected to be included in next year's health insurance catalogue and will become a new source of performance contribution.
The company insists on independent innovation and constantly promotes the development of other products under research. In terms of hepatitis B treatment: the company actively explores the combination of differential mechanism drugs and better treatment plans, and the new hepatitis B drug AK0706 carried out in cooperation with Aike Baifa has entered the first phase of clinical research. At the same time, the research and development project jointly carried out by the company and oligonucleotide drug development company Aligos Therapeutics focuses on the development of siRNA drugs, which is expected to further expand the layout of research and development pipeline in the company's hepatitis B treatment field. Other products under development: y-type polyethylene glycol recombinant human growth hormone (YPEG-GH) has completed phase 3 clinical trials, and the company's investor relations activity record sheet reveals that it will strive to promote Q1 to NDA phase in 2024; Y-type polyethylene glycol recombinant human erythropoietin (YPEG-EPO) has completed phase 2 clinical studies and is carrying out preparations for phase 3 clinical study applications. If the products under research are successfully listed, it will continue to enrich the company's product line and lay a foundation for long-term performance growth.
Investment suggestion: we estimate that the company's income growth from 2023 to 2025 will be 33.0%, 36.4% and 32.0% respectively, and the net profit growth rate will be 68.3%, 38.9% and 33.7% respectively. The corresponding EPS will be 1.19,1.65,2.21 yuan respectively, and the corresponding PE will be 33.9,24.4 and 18.3 times respectively. Give the company 30 times the valuation of PE in 2024, corresponding to a 6-month target price of 49.48 yuan per share, maintaining the buy-An investment rating.
Risk hints: the risk that the dose of long-acting interferon is less than expected, the risk of collecting policy changes, and the risk that clinical trials are not as expected.