The marginal improvement in performance in 2024 is highly visible: as collection pressure gradually clears up and the short-term influence of external industries weakens, the company's performance growth will accelerate again. Looking at key products: 1) Enbipu's generic drug development and consistency evaluation path is not fully clear, and risks are manageable in the short to medium term. As the grassroots level/retail market layout deepens, sales will maintain steady growth, and vascular dementia indications are expected to be approved in 2025 and become a new driving force for growth; 2) Duenyi (irinotecan liposome) is on the market for the first time, considering that pancreatic cancer currently significantly does not meet clinical needs, it will have impressive sales contributions next year; 3) Jin Lisheng (RANKL) will continue to focus on bone metastasis development and tumor development and metastasis Market opportunities with more space, such as osteoporosis; 4) Tianjin Other existing major products, such as Youli, will maintain steady sales growth.
The pace of new product launches will accelerate markedly in 2024-25: the company expects to launch nearly 20 new varieties/new indications in 2024-25, including potential major opportunities such as Myritecan cerebral infarction, bartholizumab, HER2 ADC, albumin docetaxel, second-generation COVID-19 mRNA vaccine, etc., and submit marketing applications for irinotecan liposomes and mycoampin B liposomes in the US around the end of the year. Among them, bartolizumab has more than 500,000 domestic applications and is expected to become the second largest target in China; HER2 ADC has excellent curative efficacy and good safety, and will form a perfect layout for multiple lines and indications in the HER2 field with the dual antibody KN026; both products have significant differentiation advantages in their respective competition for the same target. Looking at the medium to long term, the company is expected to launch more than 10 new varieties every year from 2026-28, with the goal of gradually increasing the revenue share of innovative drugs in the proprietary drug business to 70%. On the BD side, the company will strive to complete 2-3 transaction projects every year while exploring subsequent license-out opportunities for ADC's self-developed pipeline.
The impact of fluctuations in API prices is limited: 1) Vitamin C's backward production capacity is gradually cleared, which is expected to usher in an inflection point in the price cycle, and the company remains profitable in the current low price environment; 2) Caffeine prices have declined slightly, but raw material prices have also declined, so gross margin remains high. The company aims to increase the market share of vitamin C and caffeine to 70%, further increasing bargaining power.
Currently, the cost performance ratio is high, and the purchase rating is maintained: we predict that the net profit of Shiyao Pharmaceutical 2023/24/25E will reach 6.14 billion/7.03 billion/7.87 billion yuan respectively, corresponding to the 13% 2023-25E CAGR, benefiting from the impact of collection and the increase in sales driven by innovative drug release. We maintain our buy rating and target price of HK$10.0. The company is at a critical turning point where the impact of collection is clear, the R&D platform has been repeatedly verified, and many innovative technologies are about to enter an explosion period. The current valuation is very attractive.