New projects bottomed out after the first quarter of 2023, and the number of new non-COVID-19 projects in 2023 reached a record high. According to the announcement of the company's 2024 Healthcare Conference, the number of new projects added by the company was most affected by the slowdown in biotechnology financing in the first quarter of 2023. Recovery began in the second quarter, and the number of non-COVID-19 projects reached a record high in 2023. Among them, North America contributed 55% of new projects, and the number of projects in China rebounded to 25%. The drug development business was launched, and the target number of new projects was raised from 80 to 110 in 2024.
The number of new projects exceeded expectations, and the lead indicator PPQ batch grew steadily. According to the announcement of the company's 2024 Healthcare Conference, as of December 31, 2023, the company has obtained 18 external transfer projects, including 7 phase 3 clinical projects and 2 commercialization projects. Both the PPQ executed in 2023 and the PPQ planned for 2024 are growing rapidly.
Production capacity will be gradually implemented and released, and commercialization projects will contribute more revenue. According to the announcement of the company's 2024 Healthcare Conference, the production capacity of the company's Irish base climbed better than expected and is expected to achieve break-even in 2024; the Irish factory will have a large commercial production demand starting in 2024, and production capacity will be close to full production in 2025. Currently, the company has a large number of potentially important materials covering innovative targets, and has signed 4 exclusive CMO agreements; it has 7 commercialization projects worth 200 million US dollar+, 10 projects are expected to contribute 1-2 billion US dollars in commercial revenue per year, and 8 projects are expected to contribute 50 million to 100 million US dollars in commercial production revenue every year.
Profit forecasting and investment advice. It is estimated that in 2023-2025, the company's net profit to mother will be 33.57/38.24/5,078 billion, and adjusted net profit to mother will be 46.74/53.57/7.007 billion yuan, respectively, with growth rates of -5.09%/14.61%/30.79%, respectively. The PE corresponding to 23-25E adjustments is 19.38X/16.91X/12.93X, respectively. Referring to comparable companies and the company's position and growth in the industry, the company was given a 24-year adjusted net profit estimate of 20XPE, corresponding to the company's reasonable value of HK$27.40 per share, and a “buy” rating.
Risk warning. R&D progress falls short of expectations; the number of new projects is slowing down; geopolitical risks, etc.