Introduction to this report:

The company released its 2023 performance report. Overall, it is in line with expectations. Performance disturbances have been basically eliminated, cost control capabilities have remained steady, and the research pipeline is progressing steadily. It is expected that NDAs will be submitted one after another in 2024-2027, with sufficient momentum for subsequent growth.

Key points of investment:

Maintain an “Overweight” rating. The company released the 2023 performance report, and the performance was in line with expectations. Considering that the clinical pipeline is gradually entering phase III, the 2023-2025 EPS was raised to 0.48/0.49/0.50 yuan (originally 0.45/0.47/0.49 yuan), and the target price was maintained at 30.96 yuan according to the DCF valuation, and the increase rating was maintained.

Performance disruptors have basically been eliminated, and the ability to control expenses has remained steady. According to the performance report, the company achieved revenue of 1,014 billion yuan (+22.84%) in 2023, mainly due to: ① the core product Yisaipu boosted sales by increasing the coverage of hospitals and departments; ② rapid release of Septin; ③ confirmation of authorized revenue related to cooperation with Shenyang Sansheng. Previously, revenue fluctuated significantly due to price cuts and deterioration of the competitive landscape. With the rapid release of Septin and Guanippe and the exchange of price for volume, the disturbing factors weakened marginally, and it is expected that subsequent revenue disturbances will basically be eliminated. Net profit of 296 million yuan (+500.35%) was achieved after deducting non-net profit of 215 million yuan. The high growth rate was mainly due to: ① the low base for the same period in '22; ② the capitalization of R&D investment after multiple pipelines entered Phase III, and R&D expenses were reduced accordingly; ③ the ability to control costs remained steady. It is expected that good cost control will continue to guarantee steady profit growth in the future.

The research pipeline is progressing steadily, and it is expected to be listed one after another in 2024-2027. At present, most of the 4 core self-immunization innovative drugs have entered key clinical trials, and there is sufficient momentum for subsequent growth: ① The 608 psoriatic phase III clinical trial reached the main end point in 2023.12, and it is expected that an NDA can be submitted in 2024. ② The first 613 patients with phase III acute gout arthritis were enrolled in 2024.1. The study and treatment period was 48 weeks. It is expected that an NDA can be completed and submitted in 2025. ③ 611 Currently, stage III adult moderate to severe AD has been carried out. It is expected that an NDA can be submitted in 2026, and AD for children and adolescents is expected to progress steadily in the future. ④ 610 Phase II clinical trials for asthma have reached the main end in 2024.1. It is expected that phase III will be launched in 2024, and an NDA will be submitted in 2027.

Catalyst: 608 NDA submission, core pipeline data readout, rapid release of Syptin

Risk warning: risk of R&D failure, sales falling short of expectations, continued deterioration in Yisaipu's competitive landscape