Revenue grew steadily in 2023, maintaining a buy rating
The company released its annual report for the year 23 on 3/28, achieving revenue of 3.08 billion yuan (+10.7% yoy), net profit to mother of 1.17 billion yuan (-26.2% yoy), after deducting non-net profit of 1.17 billion yuan (+38.9% yoy), of which 4Q23 revenue +44.8% yoy, net profit +128.3% yoy. The main reasons for the rapid revenue growth rate: 1) 4Q23 received technical service revenue from Jianyou Co., Ltd. (technical service revenue of 107 million yuan in 2013); 2) 2Q23 some companies did not collect enough, 3Q23 medical institutions reduced insulin purchases by leading companies, compounded by 3Q23's external environmental impact on poor delivery, and 4Q23 made up for 4Q23. The growth rate after deducting non-profit is higher than the revenue growth rate is mainly due to the fact that technical service revenue is included in profit, and combined equity incentive costs are reduced. We expect net profit of 12.59/14.77/1,649 billion yuan for 24-26, and a target price of 15.73 yuan (compared to the company Wind, 24x, premium) for 24 years (compared to the previous value of 15.59 yuan).
Second-generation insulin sales are growing steadily, and price reductions are expected to be moderate
Affected by collection, the company's insulin business achieved revenue of 2.63 billion yuan (+12.8%) in '23. We estimate that second-generation insulin sales will grow in the middle single digits, but considering the high price base of 1-4M22, we estimate that sales will remain basically flat throughout the year. Considering that the company's Mendong 30/50 premixed insulin is expected to be included in collection through a contract renewal in May '24, we expect the company to accelerate sales of Mendong 30/50, and sales of second-generation insulin are expected to maintain a mid-single digit growth rate in 24 years. Considering that the insulin market pattern remained relatively stable after the sixth batch of collection in '22 (sales market share of the big three foreign companies: 78.5% in 23 years after collection vs. 84.4% in the 20 years before collection, PDB), we expect a manageable decline in insulin collection renewal in May '24.
Rapid release of Mendong 30/50 premix is expected to increase the company's insulin analogue sales by 60% + through collection, of which: 1) Insulin Gan: We estimate a 50% + sales increase in 23 years. Considering the high price base of 1-4M22, we estimate annual sales +~ 30%, we expect sales volume +25-30% in 24 years; 2) Mendong insulin: We estimate the combined sales volume of Mendong 30/50 premixed insulin in 23, with sales volume of 250-3 million units Contributing revenue of ~100 million yuan, we expect 24 Annual sales volume doubled. Considering that Mendong 30/50 was approved late (11M22 approved) and did not participate in the sixth batch of mining, we think it is expected that harvesting will contribute significantly to this year's contract renewal.
The R&D pipeline blossomed, liraglutide was approved, and the URAT1 data disclosure company's R&D pipeline layout was comprehensive: 1) GLP-1 series: liraglutide was approved for hypoglycemic indications in December 23, the second domestic company, we expect to contribute 100+ million yuan in sales in 24 years; THDBH 120/121 (GLP-1/GIP) hypoglycemic phase 1 clinical; THDBH 110/111 (GLP-1 small molecule) hypoglycemic phase 1 clinical; 2) URAT1 series: THDBH (130 URAT1) clinical phase 2a The main end point was reached, THDBH 150/151 (XO/URAT1) phase 2a clinical; 3) insulin series: laipro insulin (soon to be produced), ultra-fast acting complementary insulin (phase 3 clinical enrollment), soluble glycine supplemental insulin (phase 1 clinical end in Germany), and Tokugu insulin liraglutide (phase 1 clinical trial soon).
Risk warning: Product sales fall short of expectations, risk of product price reduction, R&D progress falling short of expectations.