Core views:
The company issued an announcement of the 2023 annual results report: in 2023, it achieved total operating income of 5618.707 million yuan, a year-on-year decrease of 20.11%; realized net profit to mother of 76,390 million yuan, a year-on-year decrease of 481.5209 million yuan; deducted non-net profit from mother of 794.6524 million yuan, a year-on-year decrease of 458.049 million yuan. The decline in revenue was mainly affected by changes in market demand and national and local procurement, and sales and prices of some of the company's products declined. At the same time, the decline in net profit is also due to two factors: the company continues to promote research and development of innovative biopharmaceuticals, and R&D expenses have increased dramatically over the same period last year; prices of Chinese herbal medicines and some packaging materials have risen due to the impact of the raw materials market.
An agreement of more than 8 billion US dollars was reached with BMS, and the B01D1 globalization process accelerated. B01D1 is the world's first EGFR/HER3 ADC. Domestic clinical trials have entered phase III and are intended to treat nasopharyngeal cancer. It has also completed multiple phase III or critical registration phase II clinical research applications in the NSCLC field. In terms of overseas clinical development, the company has launched a global multi-center phase I clinical trial to treat NSCLC. Meanwhile, according to the company's announcement on December 12, 2023, the subsidiary Systimmune has reached a global strategic cooperation agreement with BMS. BMS will be solely responsible for the development and commercialization of BL-B01D1 outside of mainland China, with a potential total transaction volume of up to 8.4 billion US dollars. Cooperation with BMS is expected to accelerate the internationalization process of B01D1.
Innovative results are gradually being implemented. The company has established a rich pipeline of innovative drugs: on the ADC side, three different target drugs (HER2, TROP2, CD33) have entered clinical trials; in terms of double/multiple antibodies, SI-B001 (EGFRXHER3) is in phase III for NSCLC, and clinical approval for combination with docetaxel has also been approved by the FDA; and SI-B003 (PD-1XCTLA-4) is also in phase II.
Profit forecasting and investment advice. The company's revenue for 2023-2025 is estimated to be $562, 6331, and $2,372 million, respectively, mainly from stock business sales and confirmation of down payments and milestone payments related to BD. Continue to be optimistic about B01D1's global competitive potential. Using the DCF valuation method, the reasonable value of the company was obtained at 164.56 yuan/share, maintaining a “buy” rating.
Risk warning. Risk of R&D failure, product sales falling short of expectations, market competition exceeding expectations, medical insurance price cuts exceeding expectations, risks related to external licensing cooperation, etc.