Core views
Pharmaceutical Federation released its 23-year performance report. The company achieved annual revenue of 2.12 billion yuan and adjusted net profit of 410 million yuan, an increase of more than 100% over the previous year. Reserve orders increased 82% year over year. In '23, the company signed 50 new integrated projects, with a cumulative total of 143 integrated projects, including 5 PPQ projects, laying a solid foundation for future commercial growth. Looking ahead to 24 years, we believe that the booming downstream market combines the company's leading capabilities and market position in the XDC CRDMO field, and the company will continue to grow rapidly. In terms of production capacity, the Wuxi base continues to expand, and the Singapore base is progressing in an orderly manner. As its own production capacity climbs and outsourcing demand due to production turnover decreases, the company's profit margin level is also expected to continuously improve.
occurrences
Pharmaceutical Federation Releases 2023 Performance Report
On March 25, the company released its 2023 performance report. In 2023, the company achieved operating income of 2,124 billion yuan, a year-on-year increase of 114%, gross profit of 550 million yuan, a year-on-year increase of 114%, and a gross profit margin of 26.3%; in 2023, the company achieved net profit of 284 million yuan, an increase of 83% over the previous year, and achieved adjusted net profit of 412 million yuan, an increase of 112% over the previous year. Reserve orders reached $579 million, up 82% year over year.
2024 outlook: The ADC drug market is rapidly expanding and is expected to continue growing at a CAGR of 30% until 2030. The booming downstream market combined the company's leading capabilities and market position in the XDC CRDMO field, and the company is expected to maintain rapid growth for 24 years. Guided by the “Empower, Follow, and Win Molecules” strategy, the company is expected to receive more early orders in the ADC and broader bioconjugate drug fields, while advancing more projects into the later stages or PPQ stages. The 23-year PPQ project is also expected to submit a BLA, laying a solid foundation for future commercialization. In terms of capacity expansion, the company continued to expand its base in Wuxi (xMAB/xBcm2 24Q4 put into operation, XDP3 25Q2 put into operation), the Singapore base started normally, and construction progressed in an orderly manner (put into operation in '26). As its own production capacity climbs and the demand for outsourcing due to production turnover decreases, the company's profit margin level is also expected to continue to improve.
Profit forecast and investment rating: The company is the world's leading ADC CRDMO enterprise, benefiting from the rapid development of the ADC industry and the company's own leading technology platform. We expect the company's 2024-2026 revenue to be 3.11 billion yuan, 4.49 billion yuan and 6.11 billion yuan, corresponding growth rates of 46%, 45% and 36%. The company's net profit for 2024-2026 is expected to be 650 million yuan, 91 million yuan and 1.29 billion yuan, respectively. 1.37 billion yuan, corresponding growth rates of 75%, 39%, and 36%. As a leader in the ADC CRDMO field, we are optimistic about the company's long-term development potential and give it a “buy” rating.
Risk warning: New drug development falls short of expectations Risk: In the product development process, there is a risk that the R&D cycle will be extended, costs will rise, or R&D will fail due to mistakes in design and control. In the process of developing new drugs, there are risks such as uncertain clinical enrollment progress, uncertain efficacy results and safety outcome data; market competition intensifies risks: the rapid development of the global ADC industry helps the ADC outsourcing market continue to expand. The growing market may attract more manufacturers to enter and increase market competition; the increase in the number of projects falls short of the expected risk: the company's business growth also benefits from the continuous expansion of the number of pipelines and the continuous increase in project prices. The number of new projects signed by the company may fall short of expectations due to falling market demand, the decline in the company's competitiveness, etc., and ongoing projects may also decline due to factors such as pipeline development failure and increased competition; capacity expansion falls short of the expected risk: the company currently relies on Pharmacogon and Pharmaceutical Biotech, and self-built production capacity will be carried out in an orderly manner and related transactions will gradually be reduced, but the company's production capacity expansion may need to be postponed due to construction, supervision, etc. There is a risk that the expansion of production capacity falls short of expectations; geopolitical risk: the company's current revenue accounts for a relatively high share of overseas, etc.; geopolitical risk: the company currently accounts for a high share of overseas revenue, etc. It affects the company's acquisition of overseas orders, which in turn affects the company's performance.
Sensitivity analysis: Currently, the number of company projects in profit forecasts continues to grow by 30-40 projects per year, and the cost of individual projects is also increasing year by year, reaching 250 projects in 2026 (excluding drug discovery), including 116 pre-clinical development projects, 134 clinical stage projects, and 4 commercialization projects. The company is expected to achieve revenue of 6.11 billion yuan and net profit of 1.29 billion yuan in 2026. If the company is unable to achieve corresponding growth due to factors such as increased market competition and industry growth falling short of expectations, assuming a 10% to 104 pre-clinical development projects, 10% to 120 clinical-stage projects, and 2 commercialization projects in 2026, the corresponding company's revenue of 5.71 billion yuan and net profit of 1.21 billion yuan, corresponding to the previous profit forecast of 6.2%.