Performance summary: In 2023, the company achieved operating income of 3,999 billion yuan (up 5.79% year on year), achieved net profit of 619 million yuan (year-on-year decrease of 6.55%); net profit after deducting non-return to mother was 533 million yuan (down 11.60% year on year).
Drug sales have been adjusted from a “split line system” to a “hospital-retail system” model to lay a solid foundation for future development. As medical reform continues to deepen, the primary market and the out-of-hospital market are becoming more and more important. In 2023, the company adjusted its sales model and no longer set up departments with product pipelines, but divided into in-hospital and in-hospital markets, and set up hospital divisions and retail divisions to further strengthen sales capabilities. Domestic trade revenue for finished pharmaceuticals in the second half of the year was 1,068 billion yuan, up 6.18% month-on-month from 1.06 billion yuan in the first half of the year. This not only meant an effective increase in sales capacity, but also expanded the incremental space for future sales for existing varieties; the operating revenue of APIs continued to grow, up 9.60% year on year. In 2023, the sales expense ratio was about 19.6% (-1.3pp), the management expense ratio was about 5.3% (+0.2pp), the R&D expense ratio was about 10% (+0.3pp), and the cost ratio was well controlled; the gross margin was about 50.6% (-2.7pp), and the net interest rate was about 15.6% (-2.1pp), and the profit margin declined year-on-year.
Dacinib, a new drug for insomnia, was approved for marketing and officially sold in March 2024. At the beginning of December 2023, the company's first Class 1 new drug, Didacinib capsules, which are suitable for short-term treatment of patients with insomnia, was approved for marketing. After approval, the company quickly promoted the work related to product marketing. It has now completed a series of preparations such as raw material production plan declaration, raw material formulation GMP certification, and agent election. Kennonin? (Didacinib capsules) was marketed at the end of March 2024. Compared with similar therapeutic drugs previously marketed, didacinib uses the world's first GABAA receptor partial agonism mechanism to avoid excessive inhibition, thereby effectively maintaining physiological sleep time while reducing daytime damage and adverse effects. Also, due to its special metabolic enzyme system, it can significantly reduce the risk of drug interactions.
Multiple measures have been taken to build an innovative pipeline, and the refinement of new drugs, rehabilitation enteric capsules, etc. are progressing smoothly. In terms of innovative drug development, with the exception of the new drug Dacinib, which was approved for marketing for insomnia, JX11502MA capsules and new enteric rehabilitation capsules both completed the IIa stage within 2023 and achieved the expected results. Among them, JX11502MA capsules successfully started enrolling patients in stage IIb at the end of 2023.
Profit forecast and investment suggestions: Jingxin Pharmaceutical has built a multi-dimensional, multi-level product echelon and development pattern in the three major diseases of the nervous system, cardiovascular system, and digestive system. Finished drugs have resumed steady growth, and the first new drug, Dacinib, is about to be launched, which is expected to continue to inject momentum into performance. We expect the company's net profit from 2024-2026 to be 640 million yuan, 7.6 million yuan, and 800 million yuan, respectively, corresponding to PE of 15, 12, and 10 times, respectively, maintaining a “buy” rating.
Risk warning: R&D progress falls short of expectations, commercialization progress or falls short of expectations, and the impact of volume procurement policies.