The Zhitong Finance App learned that BOC International released a research report saying that considering the company's continued growth in large orders in the later stages and the high degree of certainty that performance expectations will be fulfilled, the current stock price is still significantly undervalued, maintaining the “buy” rating of Pharmaceutical Federation (02268). The 2024-25E revenue forecast remains unchanged. Based on the gradually improved profit margin forecast, the adjusted net profit forecast was raised 2%-3% to 780 million/1.17 billion yuan. The latest revenue/adjusted net profit forecasts correspond to 47%/60% 2023-26 ECAGR, respectively, with a target price of HK$42.
The main views of JBC International are as follows:
FY23 exceeded expectations, and FY24 is expected to maintain ultra-rapid growth:
Revenue in 2023 was +114.4%, and net profit/adjusted net profit were +82.1%/112.1% year-on-year respectively, all surpassing previous earnings. Gross margin and adjusted net margin were 26.3%/19.4%, respectively, which was generally stable year over year. Pre-IND service revenue accounted for 43.6% (+5.1 percentage points), and post-IND service revenue accounted for 56.4%. Non-ADC projects increased their share of revenue to 11.1% (vs. 7.6% in 2022).
By the end of 2023, the company had 143 ongoing comprehensive projects (vs. 94 at the end of 2022), including 122 pre-clinical & phase I projects, 21 phase II/III projects (including 5 PPQ projects to be declared for BLA); 129 comprehensive ADC projects and 14 non-ADC integrated projects; total uncompleted orders of US$580 million, +81.9% year-on-year. The company signed 50 new comprehensive projects throughout the year, including 42 pre-clinical and 8 clinical-stage projects, and promoted 36 projects from discovery to the CMC stage. In the future, it can support 40 IND project declarations every year. 2024 guideline: Revenue of at least 3.1 billion yuan (that is, an increase of at least 46%, of which unfinished orders at the end of last year can support more than 60% of the guideline), a steady increase in gross margin, and a capital expenditure of 1.55 billion yuan.
Simultaneous expansion of domestic and overseas production capacity:
The Wuxi base opened a dual-function production line xMAB/xBcm2 and a kilogram connector/payload facility xPLM1 in 2H23. This year, a dual-function DS production line (MAb intermediates and biocoupling, expected to be launched on 2H24) and a DP production line (1H25) will be added. The Singapore base officially broke ground last week. It is expected to be launched in 2026. After completion, it will have 2,000 L antibody intermediate production capacity and 2,000 L conjugated DS production capacity. Of the 2024 capital expenditure budget of 1.55 billion yuan, 650 million and 900 million were spent on the construction of the bases in Wuxi and Singapore, respectively.
Evolution from WuxiDar4 to WuxiDarX:
Building on Wuxidar4's proprietary technology, the company's WuxidarX technology can further meet the DAR value requirements for more ADC molecules (2 and 6). Wuxidarx can make the specific DAR content of ADC products reach 65% (can be further increased to 95% or more through additional polishing steps), and there is no need for additional modifications to the DNA and protein/antibody provided by the customer, bringing great technical convenience to the transfer of CMC and amplification technology.