Kexon Pharmaceuticals focuses on R&D, production and sales of recombinant protein drugs and microecological preparations. At the same time, the company adheres to a differentiated strategic positioning, has accumulated rich resources and commercialization capabilities in overseas product registration, overseas development and marketing, overseas GMP compliance audits, etc., and has rich commercialization experience in emerging market countries. Since 2021, the company has successively signed agreements with many domestic pharmaceutical companies, obtained sales rights for various biosimilar drugs and chemical drugs in overseas emerging market countries and standardized markets in Europe and the US, and formed a rich product portfolio in the fields of digestion and self-prevention, anti-cancer, and metabolic diseases. We believe that as newly introduced products complete regulatory audits, registration and market entry one after another, it is expected that the newly introduced products will begin to contribute revenue in 2024. The company is expected to become the leading domestic commercialization platform for biosimilars/innovative drugs. Subsequently, with the release of introduced products and the continuous introduction of new products, the company's overseas business will enter a leapfrog stage of development.
Domestic business: Stock varieties still have good growth potential, and independently developed varieties have achieved a differentiated layout.
Ipudine (human rubitin injection) accounts for a relatively high share of the domestic business. It is expected to have a certain impact on the gross margin of this product due to price reductions in collection in some provinces, but considering the increase in sales volume, the decline in cost rates, and strengthened cost control after the price reduction in collection, the impact on revenue and profits is expected to be limited.
In terms of other varieties, varieties such as Xerogin (injectable human interferon α1b) and Chang Lecang (Clostridium butyrate diactive bacteria) still have great potential for growth. In terms of self-developed products, the company differentiates its layout around its traditional areas of advantage (interferons, recombinant protein drugs, etc.) in terms of indications, dosage forms, and market positioning, which is expected to become a new performance growth point.
Profit forecasting and valuation. We expect the company's revenue from 2023 to 2025 to be 1,331 billion yuan, 1,495 billion yuan, and 1,953 billion yuan, respectively, with year-on-year growth rates of 1.1%, 12.3%, and 30.7%, respectively; net profit to mother will be -50 billion yuan, 0.2 billion yuan, and 124 million yuan, respectively. Based on the closing price on January 5, the corresponding PE will be -88.2, 218.9, and 35.6 times, respectively. The first coverage gives an “gain” rating.
Risk warning: Prices of products sold domestically were greatly reduced during collection, resulting in lower revenue and profits than expected; audits, acceptance and registration of products sold overseas were slow, resulting in lower release rates than expected; clinical trials of self-developed varieties failed or progressed lower than expected.