Focus on the entire peptide industry chain and develop multiple businesses collaboratively
Shengnuo Biotech focuses on the field of peptide pharmaceuticals, focusing on peptide raw materials, peptide preparations, and peptide CDMO businesses. The three core sectors have developed steadily in recent years. A variety of peptide API products have been registered at home and abroad. The injectable somatostatin and atoxibane acetate injections for polypeptide preparations have won the 8th batch of national collection. The CDMO pipeline project continues to advance in the later stages, continuously opening up room for growth. At the same time, the company is speeding up the construction of peptide production capacity, and production capacity for technical reform projects and fund-raising projects will be implemented one after another to provide production capacity support for future main business development.
We are optimistic about the long-term development of the company. We expect the company's net profit to be 0.70/1.41/176 million yuan in 2023-2025, EPS is 0.63/1.26/1.57 yuan, the PE corresponding to the current stock price is 49.5/24.7/19.8 times, and the company's 2024 and 2025 valuations are lower than the average valuation of comparable companies, covered for the first time, giving a “buy” rating.
Major GLP-1 products are appearing frequently, and the catalytic peptide industry chain is booming. In recent years, the development of GLP-1 drugs has been on the rise. Major single products such as simeglutide and tirpotide have appeared frequently, focusing on chronic diseases with a large patient base such as type 2 diabetes and obesity. Global annual sales are rising rapidly, and it has also attracted more companies to lay out GLP-1 drug pipelines. Currently, most GLP-1 products that have been marketed and are in the research stage are peptides. With the rapid release of the downstream market and the advancement of pipelines, pharmaceutical companies' demand for upstream peptide production capacity has increased dramatically, and leading companies related to the domestic peptide industry chain are expected to receive more orders with their strong development capabilities and high-performance products, and will enter a period of rapid development.
The implementation of new production capacity has broken through supply-side bottlenecks. The three core sub-businesses are developing strongly, and the company continues to promote peptide production capacity construction. Technology improvement projects and fund-raising projects are expected to be implemented one after another in 2024, and peptide production capacity is expected to increase to 1200+ kg. With the growing enthusiasm for peptide drug development in China and the gradual advancement of customer projects to late-stage clinical trials, the company's peptide CDMO business has developed rapidly and has provided pharmaceutical research and customized production services for 40+ projects. The company is rich in peptide raw materials. As of the end of June 2023, it had 16 self-developed polypeptide raw materials, and the products have been exported overseas. The peptide formulation business has fluctuated greatly in recent years due to collection. The “barefoot” product line Atosiban Acetate injection and injectable somatostatin won the bid for the 8th batch of national collection, which is expected to contribute additional volume to the future development of the formulation business.
Risk warning: Pharmaceutical policy changes, project progress falling short of expectations, declining demand for peptide drug research and development.