Financial Services Association, March 19 (Reporter Lu Afeng) Tonight, Changchun Hi-Tech (000661.SZ), released its 2023 annual report. Revenue achieved double-digit year-on-year growth, and net profit growth was also close to double digits. Among them, the subsidiary Baike Biotech launched the large single-product herpes vaccine at the beginning of last year, breaking foreign monopolies. The performance was particularly impressive, driving Baike Biotech to achieve a sharp increase of 175.98% in net profit over the same period last year.

However, the Financial Services Association reporter found that although the revenue growth rate of the shingles vaccine is impressive, the absolute value is still relatively small, and it faces challenges from competitor Zhifei Biotech. At present, the fundamentals of Changchun Hi-Tech's reliance on growth hormone performance to support its performance have not changed significantly. The sharp increase in R&D spending last year also indicates that the company is actively seeking a second growth point.

On the evening of March 19, Changchun Hi-Tech released its 2023 performance report. During the reporting period, the company achieved operating income of 14.566 billion yuan, an increase of 15.35% over the same period last year; net profit attributable to shareholders of listed companies was 4.532 billion yuan, an increase of 9.47% over the previous year.

Among them, the subsidiary Jinsai Pharmaceutical achieved revenue of 11.084 billion yuan, an increase of 8.48% over the previous year, accounting for 76% of Changchun Hi-Tech's total revenue; realized net profit of 4.514 billion yuan, an increase of 7.04% over the previous year. The subsidiary Baike Biotech achieved net profit of 501 million yuan, an increase of 175.98% over the previous year.

I learned from above that Changchun Hi-Tech's performance growth last year mainly depended on two core subsidiaries, Jinsai Pharmaceutical and Baike Biotech.

A Financial Services Association reporter compared the performance of Jinsai Biotech and Baike Biotech in detail and found that although the year-on-year revenue growth rate of Jinsai Pharmaceutical was not as high as that of Baike Biotech, its performance market itself was large, and the absolute value of net profit growth between the two companies almost converged, at 297 million yuan and 318 million yuan, respectively.

The rapid growth of Baig Biotech's performance is inseparable from its shingles vaccine, which was marketed early last year. In January 2023, Baike Biotech successfully marketed and sold a new type of shingles vaccine, becoming the first shingles vaccine suitable for people aged 40 and above, breaking the situation where domestic shingles prevention products are monopolized by imported vaccines and filling the shortcomings of the domestic shingles vaccine market. By the end of the reporting period, 30 provinces, autonomous regions and municipalities directly under the Central Government had completed entry and sales, becoming one of the important sources of revenue for Baike Biotech.

However, strong rivals are also on the lookout, and Baike Biotech and Zhifei Biotech are facing off in the domestic market. In October 2023, Zhifei Biotech (300122.SZ) announced that the company signed an “Exclusive Distribution and Joint Promotion Agreement” with GSK (GlaxoSmithKline). GSK will exclusively supply recombinant shingles vaccine to Zhifei Biotech and license Zhifei Biotech to market, promote, import and distribute related products in mainland China according to the agreement.

Changchun Hi-Tech once again reiterated its intention to cultivate a second growth curve in its annual report, and this is reflected in R&D investment. Changchun Hi-Tech invested 2,419 billion yuan in R&D in 2023, up 45.46% year on year. From 2021 to 2022, Changchun Hi-Tech invested 884 million yuan and 1,358 million yuan respectively, up 52.26% and 86.37% year-on-year respectively.

Although the year-on-year growth rate of R&D investment in 2023 is not as high as in previous years, judging from the absolute value of investment, Changchun Hi-Tech seems to still maintain a high level of R&D investment.

In addition, in the annual report, Changchun Hi-Tech also revealed 11 key varieties under development, including polyethylene glycol recombinant human growth hormone injections, kinazumab for injections, leuprorelin injection emulsion, and quintuximab injections. Among them, polyethylene glycol recombinant human growth hormone injections that increase Turner syndrome indications and increase idiopathic short stature (ISS) indications have been submitted and are awaiting approval.

It is worth mentioning that in January 2024, Jin Lei, the former major shareholder of Changchun Hi-Tech Company and the soul figure of Jinsai Biotech, divorced his wife Wang Simian, and the incident of cutting his shares in Changchun Hi-Tech went viral. According to the divorce agreement, Jin Lei planned to hold 30.14 million shares of the company, accounting for 7.42% of the company's total shares, which were split under the name of Wang Simian. After the split was completed, Jin Lei himself held only 1.14% of the company's shares.

The news triggered investors' collective memories of bad events in the past, such as divorce and the monetization of shares. The market value of Changchun Hi-Tech dropped to nearly 5 billion dollars in two trading days. Then, Changchun Hi-Tech released three favorable news: a conference call announcement, core figures repurchasing additional shares, and a three-year shareholder return plan of not less than 40% of distributable profits, and only then did the stock price gradually stabilize.

However, due to the reporting period for the 2023 annual report, Jin Lei's shareholding ratio of Changchun Gaoxin is still 8.56%, ranking second among shareholders holding 5% or more of the shares or the top 10 shareholders (not including shares loaned through financial transfer). Wang Simian's words did not appear in the annual report.