Event: The company released its report for the third quarter of 2023. 23Q1-Q3 achieved revenue of 2,585 billion yuan (-5.69% yoy), net profit of 286 million yuan (-13.74% yoy), and net profit of 251 million yuan (-22.14% yoy) after deducting non-treasury net profit (-22.14% yoy). 23Q3 achieved revenue of 800 million yuan (-18.03% yoy), net profit of 102 million yuan (-37.18% yoy), and net profit from non-return of net profit of 77 million yuan (-51.32% yoy).
By business sector: APIs achieved revenue of 1,347 billion yuan, a year-on-year decrease of 17.36%, mainly due to a decrease in heparin sodium sales; pharmaceutical business key products: injectable nadroparin calcium achieved revenue of 153 million yuan, a year-on-year decrease of 48.14%, a year-on-year decrease of 48.14%, a year-on-year decrease of mainly because nadroparin calcium injections won the national bid, and sales volume of injectable nadroparin calcium declined; key products in the nuclear drug business: ① FDG injections achieved revenue of 316 million yuan, an increase of 7.85% over the previous year; ② tech-labeled drugs achieved revenue of 784.46 million yuan, a year-on-year increase of 78.465 million yuan, a year-on-year increase 21.70%, the year-on-year increase was mainly due to the restoration of hospital diagnosis and treatment order and an increase in sales volume; Yunke Injection achieved revenue of 192 million yuan, an increase of 14.29% over the previous year. The year-on-year increase was mainly due to the restoration of hospital diagnosis and treatment order and increased sales volume.
Financial indicators: 23Q1-Q3 gross profit margin 43.81% (yoy +1.68pct), net profit margin 13.18% (y-0.78pct), sales expense ratio 15.71% (y+0.73pct), management expense ratio 7.19% (y+1.21pct), R&D expense ratio 4.83% (y+1.21pct), financial expense ratio 0.05% (y-y +0.99pct).
Lay out the entire nuclear drug industry chain, and the clinical trials of nuclear drug products under development are progressing rapidly. Fluorine [18F] sireotide injection (LNC1001) has now entered phase III clinical phase; fluorine [18F] fibrinostatin injection (LNC1005) has now completed the phase I clinical summary report; 177lu-LNC1004 injection and 177lu-LNC1003 are undergoing phase I clinical trials; the Tau protein positronic tracer APN-1607 is undergoing phase III clinical trials; phase II clinical trials of rhenium 188 etidronate injection have been completed; and fluorine [18F] natriuretic injection has been submitted for NDA. Furthermore, it is expected that the company will put into operation more than 30 nuclear drug production centers by the end of 2023.
Profit forecast and valuation: We adjusted the company's profit forecast. The company's 2023-2025 EPS is expected to be 0.42, 0.52, and 0.66 yuan respectively, corresponding to the closing price on November 7, 2023. PE valuations are 42.8, 34.2, and 27.2 times, respectively, maintaining the “increased holding” rating.
Risk warning: industry policy changes, new drug development progress falls short of expectations, and increased market competition