Better digest the effects of growth hormone collection, and be optimistic about the dose of long-lasting water injections. During the period 2019-2022, Changchun Hi-Tech's revenue and net profit maintained a rapid growth trend. The sales expense ratio fluctuated and declined, the R&D expense ratio showed an upward trend, and the debt pressure was low. We believe that the domestic market for genetically recombinant human growth hormone has potential for growth, and there is room for improvement in penetration rate. Judging from dosage forms, competition in the powder needle market is currently fierce. Since 2022, many provinces have collected growth hormone, and Jinsai Pharmaceutical has basically achieved the goal of delivering quantity at a price. We are optimistic about patients' good dependence on long-acting water injections. As Jinsai Pharmaceutical expands its indications and advances in FDA approval, long-term water injections have potential for dosage.
Bringing marketing and promotion is progressing steadily, and Zhifei's entry into the market in 2024 is expected to accelerate penetration. The subsidiary Baike Biotech currently owns approved vaccine products such as the varicella vaccine, nasal spray influenza vaccine, and shingles vaccine. The varieties under development are constantly advancing, and it is expected that they will continue to provide growth momentum. The shingles vaccine is the first domestic shingles vaccine developed independently by Baig Biotech for people aged 40 and above, filling a gap in the domestic market. Currently, Baike Biotech is steadily carrying out marketing and promotion with blistering, and Zhifei's agent for GSK products is expected to expand the market together.
The R&D pipeline is abundant, and we are optimistic about long-term expansion of indications and pipelines such as quinazumab. According to the company's 2023 semi-annual report and communication announcement, the R&D pipeline of the subsidiary Jinsai Pharmaceutical covers the fields of gynecology, pediatrics, andrology, and innovative oncology drugs. Some of the pipelines are already in phase III. At present, Jinsai Pharmaceutical has multiple indications for products under development, including leuprorelin, long-acting follotropin, quintuximab, and kinnaumab, etc., in phase III clinical phase. At the same time, many products are in pre-clinical, phase I clinical, and phase II clinical stages. The US clinical plan for long-acting growth hormone has now been submitted, and Jinsai Pharmaceutical continues to communicate with relevant US regulators to actively promote clinical approval and other work. We are optimistic about potential pipelines such as long-acting water injections to expand indications and quinazumab (an indication for gout arthritis).
Profit forecast and investment rating: We expect the company's 2023-2025 operating income to be 145.27/171.59/19.638 billion yuan, net profit of 48.76/56.38/6.508 billion yuan, EPS of 12.05/13.93/16.08 billion, and PE 11.69/10.10/8.75X respectively. We believe that our subsidiary Jinsai Pharmaceutical has potential for growth and has multiple phase III clinical pipelines. The subsidiary's 100 gram bioherpes zoster vaccine is expected to be released. The company's valuation is at a lower level compared to comparable companies, and the configuration is cost-effective. For the first coverage, we gave a “buy” rating.
Stock price catalysts: products are approved for listing, good R&D progress has been achieved, procurement has won bids, and the decline has been moderate.
Risk factors: policy change risk, new drug development risk, management risk due to business integration and scale expansion, and talent integration risk.