2023 revenue increased 23% year over year, with a significant increase after deducting non-net profit

The company announced 2023 revenue of 1.01 billion yuan (+23% yoy), net profit to mother of 290 million yuan (+497% yoy), and deducted non-net profit of 200 million yuan (240,000 yuan in the same period last year). The rapid increase in revenue and profit was mainly due to product release, licensing revenue and intellectual property transfer contributions. Based on the company's improved operating efficiency and gradual confirmation of authorized revenue, we expect the company to have a net profit of 2.1/23/270 million yuan in 2024-26, with reference to the average market value of the biosimilar biotech company of 13.8 billion yuan. Considering the gradual implementation of the company's innovation pipeline and outstanding self-exempt commercialization capabilities, we will give the company a 24-year target market value of 20 billion yuan and a target price of 32.43 yuan (previous value 24.45 yuan) to maintain the “increase in holdings” rating.

Yisaipu: Release volume recovered after the epidemic, ASP was slightly affected by harvesting

Yisaipu's revenue in 2023 is 570 million yuan, and domestic revenue is +10.5%. Considering the impact of harvesting expansion, we expect Yisaipu's revenue to face some pressure in 24:1) Price: 3M22 Yisaipu plans to enter Guangdong Union Mining as an alternative with 127 yuan (a decrease of about 60%). Gradual implementation in 2023 will have an impact on ASP after gradual implementation. We estimate that Yisaipu ASP will drop 10-15% in 2023. If the scope of collection expands, it may cause ASP to further advance in the future Decline; 2) Sales: Benefiting from diagnosis, treatment, repair and marketing, we estimate that domestic sales will increase by 25-30% year-on-year in '23. If the area collected is expanded, it is expected that price will be exchanged for volume. In addition, the company will promote volume through pre-filling of water needles and the sinking of the county area.

Ceptin and guanippe continued to be released, and CDMO was affected by the pace of orders 1) Septin: Revenue increased 41.8% year-on-year to 230 million yuan in 2023, and is expected to grow by 30-40% in 24 years: covering more than 1,300 hospitals in 23 years, CSCO guidelines recommend first-line treatment for advanced breast cancer, successful renewal of 1M23 contracts, and lifting of combined use reimbursement restrictions. 2) Genippe expects revenue of 40 million yuan (+59.4% yoy) in 2023, which is expected to continue to grow rapidly in 24; 3) CDMO's revenue in 23 is 60 million yuan, which declined due to the pace of order execution, and is expected to remain steady in 24.

The R&D pipeline is progressing smoothly, and management efficiency continues to improve

Since 21, the company has continued to focus on the self-exemption circuit, and 2024 is expected to usher in a good harvest period; 1) IL-17A: 4Q23 is expected to read the main end point data for psoriasis phase III and NDA; 2) IL-4R: Adult AD phase III completed the first patient enrollment (1M24); 3) 7M23 IL-5 completed phase II enrollment and started phase III in 24; 4) IL-1β reached the main end point and advanced to phase III in 24; 4) IND IL-33 was approved. It is expected that IL-17A (2024E), IL-1β (2025E), IL-4R (2026E), and IL-5 (2026E) NDAs will be gradually submitted from 2024. In 2023, the company's gross profit margin was 77.9% (+2.3pct), mainly due to process optimization; R&D/sales/management rates were 28%/25%/6%, respectively, -10/-6/-4pct, compared with -10/-6/-4pct. The main reason for rate optimization was cost reduction and efficiency. The company announced the “2024 “Improve Quality, Increase Efficiency and Value Return” Action Plan, and proposed that in the future, it will further comprehensively promote R&D, implement medium- and long-term incentive plans, and improve management efficiency.

Risk warning: Yisaipu price reduction risk, risk of product failure under development, commercialization risk.