The company released its 2023 annual report. In 2023, the company achieved revenue of 14.566 billion yuan (YoY +15.35%, same below), realized net profit of 4.532 billion yuan (+9.47%), and realized net profit of 4.516 billion yuan (+9.63%) without deduction to mother. Looking at a single quarter, the 2023Q4 company achieved revenue of 3.884 billion yuan (+30.3%), realized net profit to mother of 920 million yuan (+36.12%), and realized net profit of non-return to mother of 899 million yuan (+30.72%). In addition, the company plans to distribute cash dividends of RMB 45 for every 10 shares to all shareholders, with a total dividend of RMB 1,810 billion, and a dividend rate of 3.4%.
Performance was in line with expectations, and long-term growth hormone emissions drove overall growth. Q4 revenue and profit declined month-on-month, and the year-on-year growth rate was faster than in Q3. The annual results are in line with market expectations, and growth is expected to continue to recover mainly due to the rapid release of long-term growth hormone. Looking at the company's segments: 1) 2023 Jinsai Pharmaceutical achieved revenue of 11.084 billion yuan (+8.48%), achieving net profit of 4.514 billion yuan (+7.04%); 2) Baike Biotech achieved revenue of 1,825 million yuan (+70.30%), achieving net profit of 501 million yuan (+175.98%); 3) Huakang Pharmaceutical achieved revenue of 703 million yuan (+6.73%); 4) Hi-Tech Real Estate achieved revenue of 915 million yuan (+ 13.71%), achieving net profit of 74 million yuan (+16.25%) to mother.
Investment in R&D continues to increase, and new businesses are progressing smoothly and steadily. Looking at the company's various expense ratios, the 2023 sales expense ratio was 27.26% (2.89pct decrease), the management expense ratio was 6.57% (0.05pct increase), the financial expense ratio was -0.78% (decrease 0.02pct), and the R&D expense ratio was 11.83% (1.07pct increase). According to the company's annual report, in 2023, Jinsai Pharmaceutical established 5 new BUs, including pediatric integration, women's health, adult endocrinology, dermatology, and oncology. The revenue from non-pediatric core business-related products already accounts for nearly 10% of Jinsai Pharmaceutical's overall revenue throughout the year.
Regional collection of growth hormone in Guangdong is expected to be achieved in exchange for price, and the Zhejiang regional collection situation is yet to be tracked.
On March 10, 2022, the Guangdong Union's procurement offer ended, and the company won the bid for growth hormone powder at P2 price. On July 27, 2023, Zhejiang Province officially issued the “Notice on the Collection of the Fourth Batch of Drugs”. The tender was opened on December 27, 2023. The company selected both the dosage forms of growth hormone powder and water injections.
The vaccine subsidiary approved a single blisters product, creating the second largest growth pole. In January 2023, the company's application for a marketing license for the shingles vaccine was approved, making it the first shingles vaccine for people aged 40 and over in China. By the end of the reporting period, 30 provinces, autonomous regions, and municipalities directly under the Central Government had completed entry and sales, contributing new profit growth points to the company. In the future, there is no shortage of major single products such as liquid nasal spray influenza vaccine, diploid vaccine, and RSV vaccine, which are expected to be relayed to market.
Profit forecast. According to the adjusted profit forecast from the annual report, the company's net profit for 2024-2026 is expected to be 5.156 billion yuan, 5.908 billion yuan, and 6.706 billion yuan, with year-on-year growth rates of 13.8%, 14.6%, and 13.5% respectively. Corresponding PE is 10x, 9x, and 8x respectively. The valuation is cost-effective and maintains a “buy” rating.
Risk warning: Growth hormone growth is slowing; development of new drugs falls short of expectations; promotion of newly launched products falls short of expectations; drug collection and price reduction.