Business performance is growing rapidly. In 2023, Sansheng Pharmaceutical achieved revenue of 7.816 billion yuan (+13.8%), gross profit of 6.642 billion yuan (+17.1%), and gross margin increased to 85.0% (+2.4pct); the company achieved net profit of 1,549 billion yuan (-19.1%) and adjusted net profit from operating income of 1,952 billion yuan (+17.7%). Business segments such as biopharmaceuticals and hair health have all achieved relatively rapid growth. In 2023, the company's R&D expenses were 795 million yuan (+14.6%), the R&D expense ratio was 10.2% (+0.1pct); sales expenses were 3.06 billion yuan (+16.5%), sales expenses ratio 38.5% (+0.9pct); management expenses were 481 million yuan (+22.2%), management expenses rate 6.2% (+0.4pct); financial expenses were 212 million yuan (+106.6%), financial expenses rate 2.7% (+1.2pct). The company's various expense ratios increased slightly year over year. Based on good profit levels, the company plans to pay a dividend of HK$0.25 per share, corresponding to a dividend rate of about 4.5%, and is expected to maintain a sustainable dividend policy.
Turbie Australia and Mandy have strong sales performance. Turbinao had annual sales of 4.205 billion yuan (+23.8%), and sales grew rapidly. With the continuous replacement of traditional interleukin-based platelet raising drugs, the number of hospitals covered by Terbi Australia, and the expansion of indications, it is expected that sales of Terbiao will continue to grow. Mandy continued its rapid growth trend with annual sales of $1,124 million (+25.8%). According to data from the Chinese Pharmaceutical Society, Mandy occupied 72.6% of the market share in domestic medical institutions in '23.
Mandy foam has been approved for marketing, and differentiated dosage forms are expected to become a new driving force for growth.
We place equal emphasis on self-development and BD, and work hard in the field of treatment where we have an advantage. Sansei Pharmaceutical has many pipeline development layouts in the fields of nephrology, hematology and oncology, self-immunity, and hair and skin. In the field of nephrology, long-term EPO (SSS06) phase 3 clinical trials have been completed, and a marketing application will be submitted soon; the introduced product Remitch has been approved for marketing.
In the field of hematology and oncology, ITP indications for children in Terbi Australia have been submitted for marketing. Indications for thrombocytopenia related to chronic liver disease are undergoing phase 3 clinical trials; PD1 monoclonal antibodies in cooperation with Cornerstone Pharmaceuticals are undergoing phase 3 clinical trials. In the field of self-immunity, phase 3 clinical trials of 608 have reached the main end point and are expected to be declared for sale in the second half of the year; products such as 613, 611, and 610 have already entered phase 3 clinical trials. In the field of hair and skin, the introduced product Winlevi is also undergoing clinical trials.
Risk warning: Innovative drug development has failed or progress has fallen short of expectations; price cuts for core products have exceeded expectations.
Investment advice: Maintain a “buy” rating.
Due to the fact that net profit due to 2023 was slightly lower than expected and the company's various expense ratios increased, we lowered the company's profit forecast for 24-25; the company's net profit for 2024-2026 is 19.3/21.5/2.42 billion yuan (the value was 23.7/2.63 billion yuan 24-25 years ago), up 24.7%/11.4%/12.6% year-on-year, corresponding to the current stock price PE = 6.9/6.2/5.5x. The company has steady growth and good profit levels. The R&D pipeline is about to enter a harvest period, maintaining a “buy” rating.