occurrences
On March 27, 2024, Luye Pharmaceutical released its 2023 annual report. The company achieved revenue of 6.143 billion yuan, +2.70% year over year; of these, product sales revenue was 5.627 billion yuan, +11.23% year on year; net profit to mother was 533 million yuan, -11.94% year over year.
reviews
Management efficiency continues to improve, and financial structure is significantly optimized
The cost rate during the reporting period was 74.77%, -4.16 pct; of these, the sales expense ratio was 33.47%, +3.05 pct; the management expense ratio was 10.48%, +0.74 pct; the financial expense ratio was 11.00%, +3.11 pct; the other expense ratio was 10.27%, -6.28 pct; and the R&D expense ratio was 9.55%, -4.78 pct year on year. The total R&D expenses in 2023 were 587 million yuan, a year-on-year decrease of 270 million yuan in absolute value. The balance ratio was 46.9%, -7.6 pct year on year, and the company's debt reduction continues.
Revenue in all three areas grew by double digits. During the reporting period, product sales accelerated recovery, the Group achieved double-digit growth in product sales in the three major fields of oncology, cardiovascular, and central nervous system. Revenue in the field of oncology treatment reached 2.122 billion yuan, a year-on-year decrease of 8.0%. Excluding revenue from authorized cooperation, net product sales revenue was 1,920 billion yuan, an increase of 26.3% over the previous year, and the growth rate recovered significantly. Revenue from the cardiovascular system treatment sector reached 1,687 billion yuan, an increase of 10.8% over the previous year. Revenue in the field of central nervous system treatment was 1,695 billion yuan, an increase of 28.1% over the previous year, and domestic and foreign products grew strongly. Revenue in the field of metabolic therapy was 450 million yuan, a year-on-year decrease of 28.8% due to the company's current lack of research and progress in this field. The share of Liparin, the company's exclusive tumor line variety, has rebounded markedly; the exclusive cardiovascular product Sericang has gone overseas to international markets such as Central Asia and Latin America; the CNS line's original product Siricang's market position is stable, and the international market for CNS products continues to open up.
Advances in overseas travel and innovation have been implemented intensively. New products have entered the rapid adoption period in 2023. The Group has 5 new products approved. The potential tumor product Baituwei was approved for listing in China for breast cancer and prostate cancer, and successfully entered the 2023 national health insurance catalogue; Zepzelca (Zepzelca) was approved for listing in Macau and Hong Kong to benefit SCLC patients first through policies related to the Greater Bay Area. It is currently under NDA review in mainland China; the CNS patch product Lease's Tomorrow Day Patch has been approved in China and has previously been marketed in Japan and other countries; Rykindo (Rykindo) was approved for marketing in the US and is expected to promote global commercialization in China, the US, and Europe; rotigotin patches have been approved for marketing in Europe; if there is good clinical feedback on the use of Ruoxinlin for depression, it is expected to be released in 24 years.
Subsequent companies also have a number of major products that have yet to be approved. Innovative products such as oxycodone naloxone sustained-release tablets, boroga, and paliperidone microcrystals have been implemented intensively, laying the foundation for subsequent growth.
Investment advice
We expect Luye Pharmaceutical's revenue for 2024-2026 to be 6.811 billion yuan, 8.395 billion yuan, and 99.25 billion yuan respectively, with year-on-year increases of 11%, 23%, and 18% respectively; net profit to mother for 2024-2026 is estimated to be 775 million yuan, 1,240 billion yuan, and 1,598 billion yuan, with year-on-year increases of 46%, 60%, and 29%, respectively. We are optimistic about the long-term value nurtured by the company in the central nervous system field, the high growth potential of overseas business, the rapid release of new oncology products such as Baituwei after launch, and the new changes brought about by improvements in the company's operations. Maintain a “buy” rating.
Risk warning
New drug development risks, risk of approval falling short of expectations, risk of rising costs, risk of fluctuating sales, risk of changes in the international situation, industry policy risks