Incidents:
Yao Ming Biotech released its 2023 annual report on March 26: in 2023, it achieved revenue of 17.03 billion yuan, an increase of 11.6% year on year; of this, revenue from non-COVID-19 projects was 16.51 billion yuan, up 37.7% year on year; realized net profit of 3.4 billion yuan, down 23.1% year on year; adjusted net profit to mother was 4.70 billion yuan, down 4.6% year on year.
Investment highlights:
Non-COVID-19 revenue is growing strongly, and the number of comprehensive projects is rising steadily. The company's revenue from non-COVID-19 projects in 2023 was 16.51 billion yuan, up 37.7% year-on-year, and COVID-related revenue was 540 million yuan; pre-IND revenue increased 9.2% to 5.40 billion yuan, early clinical development revenue increased 12.7% to 3.62 billion yuan, and post-clinical and commercial production revenue increased 12.8% to 7.73 billion yuan, of which non-COVID-19 clinical phase III and commercial revenue increased 101.7% year on year. By the end of 2023, the company had 698 comprehensive projects, of which the number of commercial/clinical phase III/ clinical phase II/ clinical phase I projects was 24/51/81/203, respectively. In 2023, 132 new comprehensive projects were added and a record number of new non-COVID-19 projects were added each year. Among them, the number of commercialized/clinical phase III/clinical phase II/clinical phase I projects was 2/7/1/8, respectively. By the end of 2023, the company's total outstanding orders reached US$20.592 billion, uncompleted service orders of US$13.40 billion, unfulfilled potential milestone payment orders of US$7.19 billion, and uncompleted orders of US$3.85 billion within three years, providing a guarantee for subsequent sustainable growth.
New production capacity has been put into operation one after another, consolidating the global dual plant strategy. The company's integrated CRDMO center in Singapore officially entered the construction phase, with a planned production capacity of 120,000 liters; Ireland's MFG6 completed the first batch of PPQ production, MFG7 successfully produced the first batch of 16,000L, and is currently undergoing 3 PPQ projects. It is expected that 5 PPQs will be produced in 2024 and close to full production capacity in 2025; the production capacity of the German MFG19 stock solution will expand to 24,000 liters, and DP7 will add a second formulation filling production line, which is expected to be put into operation in 2025; the US MFG11 will expand production capacity to 36,000 liters, and is expected to be put into operation in 2025 It was put into use in 2026, and GMP was released in 2026; Hebei MFG8 has completed 6 batches of production in 2023, and is expected to complete the first PPQ in 2024.
Profit forecast and investment rating: We expect the company's revenue for 2024-2026 to be 179/208/242 billion yuan, up 5%, 16%; net profit to mother will be 36/43/50 billion yuan respectively, up 6%, 20%, and 16% year on year, corresponding PE valuations of 15.6 times, 13.0 times, and 11.2 times. The company is the first tier of global biopharmaceutical CDMO. It has leading advantages in technology platforms, project experience and global production capacity, and maintains a “buy” rating.
Risk warning: risk of performance falling short of expectations; risk of exchange rate risk; risk of uncertain global investment and financing; risk of falling short of expectations in project commissioning; risk of brain loss.