Kain Technology released its 2023 performance report. In 2023, the company achieved operating income of 1,412 billion yuan, a year-on-year increase of 21.74%; net profit to mother was 116 million yuan, up 39.22% year on year; non-net profit deducted from mother was 122 million yuan, an increase of 123.88% year on year.
Looking at Q4 alone, the company achieved operating income of 410 million yuan, a year-on-year increase of 26.79%, net profit to mother of 0.26 million yuan, an increase of 72.29% year-on-year, and net profit after deducting non-return to mother of 0.27 million yuan, or -4.56 million yuan for the same period in 2022.
Opinion: Rapid profit growth is in line with expectations, core product values have been realized, and the revenue structure continues to improve.
On the revenue side, 2023Q1-4 achieved revenue of 193 million yuan, 376 million yuan, 434 million yuan, and 410 million yuan respectively. The year-on-year growth rate was 12.34%/17.02%/26.10%/26.79%, respectively, showing an accelerated trend. In the context of changes in the macropharmaceutical industry, the company continues to expand sales terminals in response to market demand, strengthen the marketing network layout and marketing system construction, and continue to release core Hepatitis C products and gradually form a large-scale layout. The profit side is growing faster than the revenue side, mainly due to the continuous optimization of the company's product structure, combined sales, and effective improvement in operational efficiency.
Key innovative drug research and development projects continue to advance to comprehensively expand the liver disease and anti-infection markets. Based on four major technology platforms, the company has developed multiple platforms around diseases such as viral hepatitis (hepatitis C/B), liver tumors, viral infections, and immunity. Highlights include the development of functional therapeutic drug combinations for hepatitis B with innovative drugs at the core. Product pipelines covering various drug types such as recombinant proteins, monoclonal antibodies, and siRNA have been laid out around various mechanisms such as antivirals, hepatitis B surface antigen suppression, and immune regulation through independent research and development. According to information disclosed in the company's 2023 mid-year report, the phase III clinical trial of cultivating interferon alpha-2 injections to treat chronic HBV infection in the low replication phase has completed the enrollment of all subjects and was approved for clinical trials for 48 weeks, and clinical indications for hepatic epithelioid hemangioendothelioma have been approved; the KW-045 project for herpetic angina in children is in clinical phase I; the KW-051 project to treat shingles is in clinical phase II Phase: Promote KW-040 preclinical related research.
Profit forecasting and investment advice. The company's innovative hepatitis C drug Kailiwei was renewed through national health insurance negotiations. Kailiwei's reimbursement indications were extended from gene non-type 1b to “gene type 1, 2, 3, and 6”, covering major domestic genotypes. The expansion of medical insurance indications has created strategic entry conditions for the product to increase its market share. With its dosage advantages and self-funded properties, the existing product Jin Shuxi may impact sales at the level of 1 billion in further channel expansion; PEG long-acting interferon is expected to be launched in 2025, which will increase the company's revenue; and various other existing products provide stable support for the company's performance. Based on the current state of the company's operations, we lowered our profit forecast. Net profit due to mother in 2023-2025 is estimated to be 116 million yuan/166 million yuan/240 million yuan respectively, with year-on-year growth rates of 39.2%, 43.0%, and 44.7% respectively. The corresponding PE is 40X/28X/19X, respectively, maintaining the “buy” rating.
Risk warning: risk of sales falling short of expectations; risk of falling short of expectations in new drug development; risk of industry policy, etc.