The company announced its 2023 annual results: the company achieved revenue of 10.104 billion yuan (+7.7%, the following are year-on-year ratios), net profit of 3.278 billion yuan (+26.9%), and net operating cash flow of 3.116 billion yuan (+13.7%) in 2023. By sector, the company achieved revenue of 61.69, 12.69, 13.67, and 1,299 billion yuan in anti-tumor, anti-infective, central nervous system disease, metabolism and other fields, respectively, accounting for 61.0%, 12.6%, 13.5%, and 12.9% of revenue respectively.
Innovation and internationalization are accelerating, and the share of innovation continues to rise. At present, 7 new drugs have been approved for the market. New drugs such as Amelol, Hengmu, and Freimei were rapidly released. The company's sales revenue for innovative drugs and cooperative products in '23 was 6.865 billion yuan (+37.1%), which increased to 67.9% (+14.5pct) of total revenue. The company successively reached two external licensing agreements with GSK in Q4 in '23. According to the agreement, they can obtain down payments of 85 million US dollars and 185 million US dollars, respectively.
Investment in R&D continues to be increased, and the pipeline layout is rich. The company spent 2,097 billion yuan (+23.8%) on R&D in '23, accounting for 20.8% of revenue. The company currently has 30+ innovative pipelines in the clinical research and development stage: the company is carrying out phase III clinical research on adjuvant treatment and chemotherapy indications around the core pipeline ametinib, and continues to expand ametinib treatment potential; at the same time, the company is accelerating the development process of high-quality pipelines in the early clinical stages, such as B7H3 ADC, B7H4 ADC, GLP-1/GIP, and TYK2.
Profit forecasting and investment advice. The company's commercialized innovative products continue to unleash market potential. The core is gradually showing globally competitive clinical treatment capabilities in the research pipeline. Innovation and internationalization are accelerating. We are optimistic that the company's development will reach a new level. We expect the company's 24-26 EPS to be HK$0.68, 0.59, and 0.71 HKD/share, respectively. Using the risk-adjusted DCF method, the company obtained a reasonable value of HK$22.85 per share, maintaining a “buy” rating.
Risk warning. Risks of new drug development failure or falling short of expectations, risk of innovative drug release falling short of expectations after marketing, risk of termination of external licensing, increased risk of market competition, etc.