Incident: On January 29, 2024, the company issued an announcement clarifying the relevant experience description of the company CEO Dr. Chen Zhisheng mentioned in a draft bill recently proposed by the US House of Representatives, stressing that Dr. Chen Zhisheng has not worked for any agency with a military background, and that the description of the draft bill is misleading.
The description of the recent draft bill proposed by the US is misleading and does not affect the company's operations:
Recently, the US House of Representatives proposed a draft bill involving the company's CEO Dr. Chen Zhisheng's description of the relevant experience. The company clarified this and emphasized that Dr. Chen Zhisheng has not worked for any agency with a military background, and that the description of the draft bill is misleading. The draft bill is still pending review and has no impact on the company's operations.
The number of new projects bottomed out and rebounded after 2023Q1, and the company is expected to develop steadily against the backdrop of slowing investment and financing:
New projects have bottomed out and production capacity is steadily expanding, and the company is expected to achieve steady development. Among them, in terms of new projects, according to the company announcement, the number of new projects added by 2023Q1-Q4 is 8, 38, 15, and 71, respectively. After 2023Q1, the number of new projects bottomed out and recovered strongly; in terms of capacity expansion, according to the company's announcement, the total production capacity is expected to gradually increase from 262,000 litres in 2022 to 58,000 litres in 2026. Production capacity will expand steadily to ensure rapid delivery of late-stage and commercialized projects. 2023Q4
Investment advice:
We expect the company's net profit to be $3,315 billion, $3.758 billion, and $4.789 billion respectively, up -25.01%, 13.37%, and 27.44% year-on-year respectively; EPS in 2024 is expected to be 0.88 yuan/share, giving 30 times the current PE, corresponding to a 12-month target price of 26.40 yuan/share, converted according to the exchange rate of 1 HKD=0.9095 CNY (exchange rate data as of 2024.1.30), corresponding to HK$29.04 /share, giving a buy-A investment rating.
Risk warning: Order growth falls short of expectations, order delivery falls short of expectations, industry sentiment falls short of expectations, risk of changes in overseas policies, etc.