Key points of investment
Incident: According to the company's announcement, the company achieved operating income of US$842 million in 2023, a year-on-year increase of 33.89%, net profit of -230 million US dollars, net profit to mother of -95 million US dollars, and net profit to mother for the same period last year - US$227 million. Losses narrowed sharply, and performance slightly exceeded expectations.
There are many highlights in the cell therapy business, driving rapid growth in the company's performance: CARVYKTI developed by Legend Biotech, a holding subsidiary of the company, has grown rapidly since commercial sales began in the second quarter of 2022. CARVYKTI's sales in 2023 were US$50 billion, up 273% year over year. The CARVYKTI second-line treatment application has also been submitted to the FDA and EMA. Among them, the EMA was approved in February 2024, and it is expected to receive positive news from the FDA in the future. At the same time, LB2102 cell therapy, which is in the first phase of clinical trials, was successfully authorized to Novartis in 2023, and the company's ability to develop innovative cell therapies was further recognized. As CARVYKTI's front-line approval and supply capacity increases, it will further drive the company's performance growth.
The life science business is rock-solid, creating the company's underlying logic of innovation: the company's life science business achieved external revenue of US$405 million in 2023, up 15.64% year on year, and gross profit increased from US$198 million in the same period in 2022 to US$223 million, up 12.22% year on year. Despite the decline in biomedical investment and financing, the company continued to provide innovative products and services in cutting-edge fields, promote lean management and process automation, and increase global production capacity to meet the growth of global biomedical demand, thus Continue to drive the business's long-term performance growth.
Under pressure in the short term, Baisjie successfully achieved product adjustments: The company's holding subsidiary, Bestle Biotech (which provides biopharmaceutical development services), had an external revenue of US$107 million in 2023, down 11.22% year-on-year, mainly due to the decline in biomedical investment and financing, while cell and gene therapy CDMO still maintained a growing trend. In the business, the company will further actively develop customers through differentiated advantages in quality, speed and technical capabilities. In the future, as biomedical investment and financing gradually break out of the trough, Vengbobio Business is expected to improve.
In 2023, the external revenue of Baisjie (which provides industrial synthetic biological products) was US$43 million, up 12.2% year on year. After experiencing product adjustments that began in 2022, the business is on the right track. As the competitiveness of Baisjie products in the alcohol, food, home care and other markets increases, and the product process optimization and production capacity increase, the Baisjie business will be further expanded.
Profit forecast and investment rating: The performance slightly exceeded expectations. We raised the company's net profit forecast for 2024-2025, from -1.14/-0.18 billion US dollars to -0.62 billion US dollars, respectively. We forecast the company's net profit to the mother in 2026 of US$163 million. Since CARVYKTI is in the rapid volume phase in the early stages of commercialization and the company is at a critical point of loss to profit, the company has strong growth and maintains a “buy” rating.
Risk warning: Order delivery falls short of expectations; risk of product development failure; product sales fall short of expectations; risk of exchange profit and loss, etc.