Incident Overview

Bide Pharmaceutical released its 2023 three-quarter report: the company achieved operating income of 805 million yuan in the first three quarters of 2023, an increase of 36.78% over the previous year; net profit of 113 million yuan, an increase of 15.69% over the previous year; net profit after deduction of 121 million yuan, an increase of 26.30% over the previous year. Looking at a single quarter, the company achieved revenue of 282 million yuan in Q3, a year-on-year increase of 28.44%; net profit of 30 million yuan, a year-on-year decrease of 23.83%; net profit of net income after deducting 29 million yuan, a year-on-year decrease of 21.48%.

Incident reviews

Gross margin is under pressure in the short term, and the overall cost ratio is well controlled

The gross margin of the 3Q23 company was 39.32%, down 3.9 pct year on year, up 1.27 pct month on month; in terms of cost ratio, 3Q23's sales, management, and R&D expense rates were 11.63% (year over +0.95 pct), 9.68% (year over year +2.46pct), and 5.09% (year on year -1.39 pct).

Focus on the main business and further consolidate its leading position in the “molecular building block” field. In September 2023, the company announced that it intends to terminate the original foreign investment matters of its wholly-owned subsidiary KEMIK, and sign a “termination agreement” with Baidi Biotech, former natural person shareholders of Beddy Biotech and their related parties as soon as possible.

After signing, Baidi Biotech and Baidi Biotech's original natural person shareholders returned 40 million yuan of capital to Chemik and terminated their entry into the field of biological reagents. At the same time, the company will focus on the fields of pharmaceutical molecular blocks and scientific reagents, further improving management efficiency and consolidating the company's leading position in the field of “molecular blocks”.

Investment advice

We expect the company's revenue from 2023 to 2025 to be 1,106/14.71/1,929 billion yuan; the year-on-year growth rate is 32.7%/32.9%/31.2%; net profit is 1.88/2.52/335 million yuan, respectively; the net profit growth rate is 28.8%/33.9%/33.2%; the corresponding EPS for 2023-2025 is 2.07/2.77/3.69 yuan/share; the corresponding valuation is 33/25/19 times.

Risk warning

Risk of loss of skilled talent; risk of drug molecular block design; management risk due to business scale expansion.