R&D is progressing rapidly, and innovative drugs are being marketed faster:
The company has built an international R&D team focusing on the discovery and development of small-molecule targeting, nano, monoclonal antibodies, antibody conjugation, mRNA vaccines, small nucleic acid drugs, site-conjugated polypeptide/proteins, and biomedicine in the field of immunity. In September '23, irinotecan hydrochloride liposome injection was approved for marketing in combination with 5-fluorouracil (5-FU) and folic acid (LV) to treat patients with metastatic pancreatic cancer that progressed after receiving gemcitabine treatment. Since the beginning of 2023, it has been approved for clinical trials for 15 new drug first indications under development and 13 new indications. The company has conducted clinical trials on 2 GLP-1 drugs. The company improved the dosage form and achieved injections every 2 weeks. It is expected that they will be approved for marketing in 2026. The company's ADC variety is advancing at an accelerated pace, and the HER2 ADC phase III clinical trial is about to be completed. After 24 years, it is expected to obtain excellent data on clinical efficacy and safety, and is expected to be marketed in 25 years. It is expected that 10 new varieties will be marketed every year starting in '25.
Performance continues to grow:
The company's performance grew steadily. In the first three quarters of 2023, revenue was RMB 23.865 billion, up 1.6% year on year; profit attributable to shareholders was RMB 4.495 billion, up 0.6% year on year; EPS was RMB 37.84 percent. In terms of the sector, the proprietary medicine sector achieved revenue of 19.338 billion yuan, up 3.9% year on year. Among them, neurological diseases, anti-cancer, anti-infection, cardiovascular disease, respiratory diseases, and digestive metabolism sectors increased 15.2%, -21.2%, 18.8%, -15.5%, 163.5% and 17.4%, respectively. The decline in oncology products was mainly due to the drop in the price of Keaili after collection; the raw materials sector achieved revenue of 2,875 billion yuan, a decrease of 8.2% year on year due to low vitamin C prices. Against the backdrop of the downturn in the pharmaceutical industry, especially the cold winter of the pharmaceutical industry in the third quarter, the company achieved growth performance, thanks to the company's continuous development of new product lines, a strong commercialization team, and a management team with efficient execution.
Maintain buy rating, target price HK$10.39
The company actively lays out innovative drugs and has increased R&D investment. R&D expenses are expected to reach 20% of proprietary drug revenue. A number of new drugs will be launched every year. Currently, 7 innovative drugs have been submitted for marketing. Performance growth continued for more than 10 years. This year, affected by procurement and pharmaceutical policies, it was a low point of performance. As new products continued to be launched, it returned to double digit growth in 2024. Revenue for 2023-2025 is expected to be $32.1 billion, $36.7 billion, and net profit of $6.278 billion, $7.064 billion, and $7.787 billion respectively. We gave the company a target price of HK$10.39, corresponding to 15 times PE in 2024, an increase of 49% from the current price, and continued to maintain the purchase rating.