The company released its 2023 annual report. For the full year of 2023, the company's revenue was 7.825 billion yuan (-23.70% YoY), net profit attributable to mother was 2,269 billion yuan (YoY -31.28%), after deducting non-net profit of 2.04 billion yuan (-34.87% YoY). Looking at Q4 alone, the company achieved operating income of 1,442 million yuan (YoY -40.99%) and realized net profit of 59 million yuan (-89.89% YoY).
The decline in revenue and profit was mainly due to large orders. After exclusion, the company still achieved relatively rapid growth: the company confirmed more large orders in 2022 and fewer confirmed cases in 23. After excluding large orders, the company's revenue for the full year of 2023 was 5.405 billion yuan, an increase of 24.37% over the previous year.
By sector, after excluding large orders, each sector achieved 20% + growth: the company's small-molecule business achieved revenue of 6.62 billion yuan in 2023, revenue of 4.2 billion yuan after excluding large orders (+25.60% YoY), and the emerging business achieved revenue of 1,199 billion yuan (+20.42% YoY).
In terms of customers, multinational pharmaceutical companies are growing very strongly. The growth rate of small and medium-sized biotech has declined due to investment and financing: in 2023, the company's revenue from multinational pharmaceutical companies was 4.988 billion yuan, and revenue after excluding large orders was 2,868 billion yuan (+75.13% year over year), and small to medium biotech achieved revenue of 2,837 billion yuan (-1.47% year over year), of which overseas growth was 3.08%.
By region, the US and Europe grew better, and domestic customers were affected by investment and financing: the company achieved revenue of 5.267 billion yuan in 2023, after excluding large orders, 2,847 billion yuan (+47.47% YoY), domestic customer revenue was 14.81 (-5.31% YoY), revenue from Asia-Pacific customers (excluding mainland China) was +15.03% YoY, and revenue from the European market was +57.11% YoY.
Looking at the company's commercialization in stages, the company's commercialization growth was strong, and the front-end business remained flat: the company achieved revenue of 5.112 billion yuan in 2023, achieved revenue of 2,692 billion yuan after excluding large orders (+47.13% year over year), and the company's clinical-stage projects achieved revenue of 1,507 billion yuan, and the impact of excluding antiviral projects remained flat.
The company's overall emerging business maintained relatively rapid growth. In terms of split, revenue: chemical macromolecules +8.76% YoY, clinical research services -7.44% YoY, formulation business +18.36% YoY, technology export confirmed revenue over 100 million, biomacromolecule CDMO +31.29% YoY, and synthetic biotechnology +38.13% YoY.
Looking forward to 2024: The company will accelerate overseas production capacity layout, promote the rebalance of profitability, accelerate the development of emerging businesses, increase the construction of R&D platforms, and iteratively upgrade the operation management system, laying a good foundation for the future.
Profit forecast adjustment: Based on the impact of the current downturn in investment and financing in the biomedical industry on the overall industry, as well as the company's existing financial data for 2023, we lowered the company's profit forecast. The revenue side was lowered from $9 billion to $6.5 billion in 2024. In terms of profit margin, large orders returned to zero in 2024, and the profit margin for large orders was higher, and the profit margin for large orders was lowered accordingly.
Profit forecast and rating: We lowered our profit forecast. The company's net profit for 2024-2026 is expected to be 1,195 billion yuan, 1,550 billion yuan, and 1,887 billion yuan, respectively, up -47.3%, 25.5%, and 25.8% year-on-year; the corresponding PE is 28X, 22X, and 18X times, respectively, maintaining the “buy” rating.
Risk warning: The industry's growth rate falls short of expectations, and there is a risk that demand for pharmaceutical R&D will decline.