3Q23 revenue and profit achieved positive growth on the same month-on-month basis, maintaining the purchase rating company 10/30 to release the 23-year quarterly report, 1- 3Q23 realized revenue of 2.09 billion yuan (-0.4%yoy), net profit attributable to mother of 760 million yuan (-45.8%yoy), deduction of non-net profit of 760 million yuan (+14.5%yoy), among which 3Q23 revenue +1.9%yoy, deduction of non-net profit +26.2%yoy. The profit growth rate is higher than the revenue growth rate mainly due to the change of product structure, which leads to the increase of gross profit margin of the company (gross profit margin of 3Q23 81.2% vs 2Q2377.5% vs 1Q23 77.6%, we speculate that the main reason is the increase of insulin revenue proportion of 3Q23). Considering that insulin centralized procurement has been implemented for more than one year, liraglutide is about to be approved, and the company has entered an operating inflection point since 2Q23. We estimate that the parent net profit for 23-25 years will be 11.03/12.90/14.92 billion yuan respectively, and the deduction of non-profit will be 10.06/11.92/13.95 billion yuan respectively, and 23 x PE will be deducted for 24 years.(The target price is 13.76 yuan (the previous value is 12.82 yuan).
The sales volume of the second generation is growing steadily, and the sales volume is expected to be stable for the whole year.
Affected by centralized procurement, we speculate that the sales volume of 1- 3Q23 second-generation insulin will increase in single digits, and the sales volume for the whole year is expected to achieve medium-to-high single-digit growth. However, considering the high price base of 1- 4M22, the sales volume for the whole year is expected to be basically flat. We believe that the insulin market pattern after centralized procurement remains stable (the centralized procurement of biological agents is different from chemical agents, the allocation amount is based on the original market sales volume of enterprises, the new entrants bring less, and the subsequent market pattern is expected to be concentrated in domestic leaders + major foreign manufacturers, and relatively stable), and it is expected that the contract renewal decline next year will be controllable.
We estimate that the sales growth rate of insulin analogues in 23 years will be ~40%, among which: 1) insulin glargine: we estimate that the sales growth rate of insulin analogues in 1- 3Q23 will be 30%+, and the annual sales volume will increase by 30-40%. Considering the high price base of 1- 4M22, the annual sales volume is expected to be +~20%;2) insulin aspart: We estimate that the total sales volume of 1-3Q23 quick-acting winter and 30/50 premixed insulin is 1.5 million + pieces, and it is expected to achieve sales volume of 2 - 3 million pieces in the whole year, contributing revenue of ~ 100 million yuan. Considering that Mendong 30/50 was approved late (11M22 approved) and did not participate in the sixth batch of centralized procurement, we believe that it is expected to contribute a large increment in the renewal of next year.
R & D pipeline blossoming at multiple points, liraglutide approval is imminent, URAT1 data is about to be disclosed, the company's R & D pipeline layout is comprehensive: 1) GLP-1 series: liraglutide has been applied for hypoglycemic indication BLA on 7M22, the second domestic one, we expect approval by the end of 23;THDBH 120/121 (GLP-1/GIP) Hypoglycemic IND;THDBH 110/111 (GLP-1 Small Molecule) Hypoglycemic IND, Semeglutide (GLP-1) Preclinical;2) URAT1 Series: THDBH 130 (URAT1) Clinical Phase 2a Database lock and unblinding completed, we expect to disclose data in the near future, THDBH 150/151 (XO/URAT1) Phase 1 clinical;3) Insulin series: insulin lispro (5M23 clinical phase 3 out), faster-acting insulin lispx (primary endpoint reached in phase 1, phase 3 clinical entry), soluble insulin glargine lispx (German phase 1 clinical end), insulin degludec (9M22 approved clinical).
Risk tips: product sales are not as expected, the risk of product price reduction, R & D progress is not up to expectations.