The Zhitong Finance App learned that Dongwu Securities released a research report stating that it maintained the “buy” rating of Kingsley Biotech (01548), slightly exceeded expectations, and raised the net profit forecast for 2024-2025, from -1.14/ -0.18 billion US dollars to -0.62/033 million US dollars, respectively, and predicted net profit to mother of US$163 million in 2026. 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 potential. In 2023, we achieved operating income of US$842 million, net profit of -230 million US dollars, net profit to mother of -95 million US dollars, and net profit to mother of -US$227 million in the same period last year. Losses narrowed sharply, and performance slightly exceeded expectations.

The main views of Dongwu Securities are as follows:

There are many highlights in the cell therapy business, driving the company's rapid growth in performance:

Since the company's holding subsidiary, CARVYKTI developed by Legend Biotech began commercial sales in the second quarter of 2022, sales have grown rapidly. In 2023, CARVYKTI's sales volume was US$50 billion, an increase of 273% over the previous 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. With CARVYKTI's front-line approval and increased supply capacity, it will further drive the company's performance growth.

The life sciences business is rock-solid, creating the underlying logic of the company's 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 continuing to drive the long-term performance growth of the business.

Under pressure for a short period of time, Baisjie successfully achieved product adjustments:

The company's holding subsidiary, Fengbo Biotech (which provides biologics development services), had an external revenue of US$107 million in 2023, down 11.22% from the previous year. Mainly due to the decline in biomedical investment and financing, the large molecule CDMO business contracted, while cell and gene therapy CDMO still maintained a growing trend. The company will further actively explore customers through differentiated advantages in quality, speed and technical capabilities. In the future, as biomedical investment and financing gradually breaks out of its trough, the booming biotech business is expected to improve. In 2023, the external revenue of Baisjie (which provides industrial synthetic biological products) was US$43 million, an increase of 12.2% over the previous year. After experiencing product adjustments starting in 2022, the business is already 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, Baisjie's business will be further expanded.

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.