Incident: On March 26, 2024, Yao Ming Biotech released its 2023 annual report. It achieved annual revenue of 17.03 billion yuan, up 11.6% year on year, revenue growth rate of 37.7% from non-COVID-19 projects, net profit to mother of 3.4 billion yuan, down 23.1% year on year, and adjusted net profit of 4.70 billion yuan, down 4.6% year on year.
The number of new non-COVID-19 projects has reached a record high, and post-clinical and commercialization revenue is growing steadily. In 2023, the company signed 132 new projects, showing a quarter-by-quarter acceleration trend. The total number of pipeline projects reached 698, an increase of 18.7% over the previous year. The R side showed a gradual recovery trend. Revenue in 2023 was 5.402 billion yuan, up 9.2% year on year, milestone and research service revenue exceeded 87 million US dollars, and the number of pre-clinical projects was 339, an increase of 39 over the previous year. Early-stage clinical revenue of $3.617 billion was $3.617 billion, up 12.7% year over year. There were 203 and 81 phase I and phase II clinical projects, respectively, bringing more flow to later stages and commercialization. Phase III clinical and commercialization revenue of 23 billion yuan was 7.732 billion yuan, up 12.8% year on year. Among them, the non-COVID-19 growth rate reached 101.7%, and 51 clinical phase III projects and 24 commercialized projects were reserved. Continued growth in commercialization projects brought broad room for growth.
New overseas production capacity has been put into operation one after another, and the global dual plant strategy fully meets customer needs. The company's capital expenditure in 2023 was 4.1 billion yuan, mainly used to build production capacity in Europe and the US, and is expected to grow further to 5 billion yuan in 24. (1) Construction of the CRDMO base in Singapore has officially begun, with a planned production capacity of 120,000 liters, and 1,500 jobs will be provided after commissioning; (2) The Irish MFG6 completed the first batch of PPQ production, and the MFG7 has successfully produced the first batch of 16,000L, and production capacity is currently climbing faster than expected. Currently, 3 PPQ projects are being carried out. 5 PPQ is expected to be completed in 2024, and production capacity is close to full production in 25; (3) The production capacity of MFG19 in Germany will double to 24,000 liters, and DP7 will add a second formulation filling production line, which is expected to be put into operation in 25; (4) ) The US MFG11 expanded production capacity to 36,000 liters, and is expected to be officially put into operation in 2025 and put into GMP production in '26; (5) Shijiazhuang MFG8 has completed 6 batches of production, and the first PPQ is expected to be completed in 2024.
Ample on-hand orders guarantee revenue growth, and the R&D side is expected to accelerate recovery. As of the end of 2023, the company's active orders were US$20.59 billion, and uncompleted orders within 3 years grew to US$3.85 billion, consolidating recent revenue growth expectations. Global biotechnology investment and financing began to pick up in Q4 2023. As of March 22, the company signed 25 new projects in 24Q1, far exceeding the 8 newly signed projects in 23Q1. As early clinical molecules are gradually diverted to later stages, several major projects have advanced to the PPQ stage, compounded by the successive expansion and commissioning of overseas commercial production capacity, and the M side is expected to contribute considerable revenue in 2025. The company expects revenue to grow by 5%-10% in 2024, and the non-COVID-19 revenue growth rate is 8%-14%.
Investment advice: Pharmaceutical Biotech has the world's leading open, integrated biopharmaceutical capabilities and technology enabling platform, and CRDMO drives the company's business to continue to grow. We expect the company's revenue in 2024-2026 to be 183.55/ 220.43/25.574 billion yuan, up 7.8%/20.1%/16.0% year-on-year, and net profit to mother of 38.13/46.55/ 5.486 billion yuan, corresponding PE of 14/12/10 times, maintaining the “recommended” rating.
Risk warning: Overseas regulatory risks, risks related to international trade and regulations, recovery in investment and financing falling short of expectations, increased risk of industry competition, exchange rate risk, etc.