The impact of collection was gradually cleared up, and performance achieved steady growth. In 2023, the company achieved operating income of 3,075 billion yuan, a year-on-year increase of 10.7%; realized net profit of 1,168 billion yuan, a year-on-year decrease of 26.2%; and realized net profit of 116,800 yuan without return to mother, an increase of 38.9% over the previous year. The company's revenue achieved relatively rapid growth, and net profit without return to mother achieved strong growth. After the implementation of the national special insulin collection in 2022, the company offset the impact of price cuts after insulin collection was implemented. The sales volume of the full range of insulin products in 2023 was 83.22 million units (+12.84%), while the company's product market share continued to rise: ① Human insulin sales continued to grow steadily. In 2023, the company's insulin market share exceeded 40%, ranking first in the industry; ② the insulin market share of the insulin market was stable. The share continues to grow rapidly, Nearly 10% in 2023; ③ Sales of insulin analogues increased by more than 60% in 2023.
Promote cost reduction and efficiency, and continue to improve profitability. In 2023, the company achieved a gross profit margin of 80.1% and a net interest rate of 38.0% after deduction, an increase of 2.3 and 7.7 pct compared with 2022, respectively. The deducted non-net interest rate increased significantly. The decline in net profit is mainly due to an increase in investment income in 2022, which led to a higher base. The company's operating efficiency continued to improve, and the cost ratio improved to varying degrees during the period. Combined with profit contributions from technical service revenue obtained from Hong Kong Jianyou, the company achieved a relatively high growth rate of the same as net profit deducted throughout the year. On the cost side, in 2023, the company's sales expense ratio, management expense ratio, and R&D expense ratio were 29.7%, 4.4%, and 3.4%, respectively, down 3.9 pct, 2.1 pct, and 1.9 pct from 2022, respectively.
The layout of endocrine metabolism pipelines progressed in an orderly manner, and products made continuous breakthroughs in overseas markets. The company's treatment field gradually expanded from diabetes to various clinical scenarios such as gout/hyperuricemia, sugar reduction, weight loss, and non-alcoholic steatohepatitis. In 2023, the summary report of the Phase I clinical trial of a gout dual-target inhibitor (THDBH151 tablets) was completed, and the safety and tolerability were good; the GLP-1 /GIP dual-target receptor agonist (THDBH120 for injection) was clinically accepted for weight loss indications. In addition, the company signed a strategic cooperation agreement with Jianyou Co., Ltd. on the three insulin injections of glycine, mentong, and laipong in the US market to continuously expand international business.
The company's performance is in line with expectations, and insulin levels are expected to continue. The company's earnings per share for 2024-2026 are 0.64/0.74/0.80 yuan, respectively (the original forecast is 0.66 yuan per share for 24). According to comparable companies, we gave the company a price-earnings ratio of 23 times in 2024, and the corresponding target price was 14.84 yuan, maintaining the purchase rating.
Risk warning
There is a risk that insulin sales volume falls short of expectations, policy control exceeds expectations, and new drug development falls short of expectations.