Brief performance review
On March 28, 2024, the company released its 2023 annual report. In 2023, the company achieved revenue of 210 billion yuan, an increase of 38% over the previous year; realized net profit of 555 million yuan, an increase of 94% over the previous year; and realized net profit withheld from mother of 579 million yuan, an increase of 74% over the previous year. Looking at a single quarter, in the fourth quarter of 2023, the company achieved revenue of 641 million yuan, a year-on-year increase of 67%; realized net profit of 187 million yuan, an increase of 115% over the previous year; realized net profit without deduction of 169 million yuan, an increase of 87% over the previous year.
Management analysis
Research on the cure of chronic hepatitis B continues to be deepened, and the core product Pegobin is rapidly being released. Pegobin (polyethylene glycol interferon alpha-2b injection) was approved for marketing in 2016. It is the first long-term interferon product with completely independent intellectual property rights in China. It is mainly used in the field of viral hepatitis and is a first-line drug for antiviral treatment of chronic hepatitis B. Clinical treatment of chronic hepatitis B is progressing towards a new stage of expanding the number of people treated with antiviral treatment and expanding the number of clinically cured patients. Scientific evidence for clinical treatment of hepatitis B based on Pegbin continues to accumulate. The competitive advantage of Pegobin-based hepatitis B treatment programs in the field of hepatitis B treatment continues to expand, product market penetration continues to increase, and sales revenue is growing rapidly. In 2023, the company's core product, Pegbin, achieved revenue of 1,790 billion yuan, an increase of 54.21% over the previous year, with sales volume of 2,846,700 units, an increase of 46.68% over the previous year.
Deeply involved in the field of immunity and metabolism, and continuously enrich the product pipeline. Guided by clinical value requirements, the company is deeply involved in the field of immunity and metabolism, actively expands comprehensive innovation capabilities, and strives to build medical science management capabilities. Through independent internal innovation and external open cooperation, we actively integrate high-quality resources at home and abroad, including research cooperation with Aligos Therapeutics, Inc., carrying out commercial cooperation projects with Jiangsu Fosun, and obtaining exclusive licensing rights for products related to Suzhou Corning Jerry in the field of non-alcoholic fatty liver disease on a paid basis. “The company's Y-type polyethylene glycol recombinant human growth hormone (YPEG-GH)” has completed phase III clinical research and was accepted for drug registration in January 2024; AK0706 and human interferon α2b spray each obtained drug clinical trial approval notices in January 2023, and phase I clinical research is currently being carried out. The company's R&D work continues to advance, and the product pipeline is expected to continue to be rich.
Profit Forecasts, Valuations, and Ratings
We maintain profit expectations. We expect the company to achieve net profit of 7.78 (+40%), 10.39 (+34%), and 13.33 (+28%) billion yuan in 2024-2026, corresponding to current EPS of 1.91 yuan, 2.56 yuan, and 3.28 yuan, respectively, corresponding to the current P/E of 34, 26, and 20 times, respectively. Maintain a “buy” rating.
Risk warning
New product approval falls short of expectations; new product sales promotion falls short of expected risk; risk of technical results not being effectively transformed.