Incidents:
The company announced its 2023 annual results. The full year of 2023 achieved revenue of US$840 million, +34.2% year over year; gross profit of US$410 million, +34.7% year over year; adjusted net profit of US$298 million, narrowing 17.0% year over year. The results were generally in line with expectations.
Non-cellular therapy businesses such as life sciences maintain steady growth
Non-cell therapy business revenue in 2023 was US$555 million, +8.9% YoY; adjusted net profit of US$58 million, -6.9% YoY. Among them, life science business revenue was US$405 million, +15.6% year over year, benefiting from improvements in European and American business volume and overseas operating efficiency, with adjusted net profit of US$78 million, +19.4% year on year; biopharmaceutical CDMO business revenue was US$110 million, -12.4% YoY, adjusted net profit -US$30 million, year-on-year loss increased by US$29 million; industrial synthetic biological products business revenue was US$43 million, +11.4% YoY.
The “best-in-class” cell therapy product Carvykti accelerated sales of the BCMA CAR-T product Carvykti in 2023, making it the fastest selling CAR-T product in the world within 2 years. Legendary Biotech received a share of $250 million in sales, plus a milestone payment of $35 million in partnership with Johnson & Johnson, and annual revenue of $285 million, +144.2% year over year.
In 2024, Legendary Biotech and Johnson & Johnson will further expand the supply of cell therapy production capacity to meet the needs of more commercial patients while advancing first-line phase III clinical treatment. The discussions at the FDA Oncology Advisory Committee on March 15 also confirmed that Carvykti has favorable benefits-risk results in the treatment of 2-4 multiple myeloma. It is expected that it will be successfully approved for line 2-4 before April 5, 2024, to further expand the target patient population.
Profit Forecasts, Valuations, and Ratings
Considering the further acceleration of sales of innovative drugs, we expect revenue for 2024-2026 to be US$13.31/20.30/US$2,792 million, respectively, with corresponding growth rates of 58.52%/52.54%/37.56%, respectively; net profit to mother of -1.48/0.33/US$226 million, respectively, with corresponding growth rates of -54.87%/121.99%/596.23%, respectively. In view of the large differences between the company's business segments, we used the segmental valuation method to give the company a target market value of HK$58.3 billion in 2024 and a corresponding target price of HK$27.43, maintaining a “buy” rating.
Risk warning: Clinical trial results fall short of expectations; commercialization of new products falls short of expectations; industry policy fluctuations; increased market competition; changes in exchange rates