Short-term performance is under pressure, maintaining a “buy” rating
The company released the three-quarter report for 2023. The first three quarters of 2023 achieved operating income of 2,585 billion yuan, a year-on-year decrease of 5.69%; realized net profit of 286 million yuan, a year-on-year decrease of 13.47%; achieved net profit of 251 million yuan, a year-on-year decrease of 22.14%; during the reporting period, sales revenue of the API business sector was 1,347 billion yuan, a year-on-year decrease of 17.36%, mainly due to a decrease in sales of heparin sodium; key products in the pharmaceutical business achieved revenue of 153 million yuan, a year-on-year decrease of 48.14% This is mainly due to reduced prices for the collection of nacriparin calcium injections. 18F-FDG injection, a key product in the nuclear drug business, achieved revenue of 316 million yuan, an increase of 7.85% over the previous year; Yunke injection achieved revenue of 192 million yuan, an increase of 14.29% over the previous year. Considering the pressure on short-term performance, we lowered our net profit forecast for 2023-2025 to 3.68/4.64/528 million yuan (original value was 4.06/4.92/561 million yuan), the EPS for 2023-2025 was 0.45/0.56/0.64 yuan, and the current stock price corresponding to PE is 40.8/32.4/28.5 times, respectively. However, considering that the company's innovative nuclear drug research and development continues to advance, and there is a lot of potential room for developing diagnostic drugs for Alzheimer's disease, it is expected that related products will gradually be implemented in the future, maintaining the “buy” rating.
Research and development of innovative nuclear drugs continues to advance, helping the company achieve innovation and transformation in the field of nuclear drugs. The company's fluorine [18F] sireotide injection has entered phase III clinical trials, fluorine [18F] fibrinostatin injections have completed phase I clinical summary reports; and research and development of 177Lu-LNC1003 injections and 177Lu-LNC1004 injections continues to advance. We expect that with the continued progress of nuclear drug products, the value of the company's nuclear drug platform will gradually be highlighted.
There is a lot of potential for diagnostic drugs for Alzheimer's disease, and they are expected to contribute to increased performance in the future. According to the “China Alzheimer's Disease Report 2021,” the current number of patients with AD and other dementias worldwide in 2019 was about 51,6242 million, of which the current number of patients with AD and other dementias in China was 13.144 million.
The company is currently developing a diagnostic drug for Alzheimer's disease, 18F-APN-1607 injection, which is currently in phase III clinical trials.
We expect that if the subsequent 18F-APN-1607 injection is successfully marketed, it is expected to contribute to the company's performance increase.
Risk warning: The speed of new installations of PET-CT and the expansion of the company's nuclear pharmacies fell short of expectations; clinical progress of nuclide drugs fell short of expectations; prices of heparin APIs fell.