The non-COVID-19 business is growing steadily, and the overall number of on-hand orders is quite abundant

In 2023, the company achieved revenue of 17.051 billion yuan, up 11.5% year on year; non-COVID-19 projects achieved revenue of 16.506 billion yuan, up 37.7% year on year; net profit to mother was 3.400 billion yuan, down 23.1% year on year; adjusted net profit to mother was 4.699 billion yuan, down 4.6% year on year. After excluding COVID-19 projects, the company's performance grew steadily, and the number of new comprehensive projects increased rapidly from the second half of 2023; by the end of December 2023, the company's total number of uncompleted orders had increased to US$20.592 billion, and the number of uncompleted orders within 3 years was about US$3.85 billion, providing a guarantee for the company's future performance growth. Considering the slowdown in the pace of investment and financing of global new drug development and the large fluctuations in downstream demand, we lowered the 2024-2025 profit forecast and added the 2026 profit forecast. The estimated net profit for 2024-2026 is 40.47/50.47/6.257 billion yuan (originally estimated at 67.63/9.01 billion yuan), EPS is 0.95/1.19/1.47 yuan, and the PE corresponding to the current stock price is 13.8/11.1/9.0 times. Given that the company is a leading CRDMO company in the global biopharmaceutical field, it has A certain level of scarcity maintains a “buy” rating.

The number of comprehensive projects has been growing steadily. By the end of 2023, the number of post-clinical and commercial projects continued to grow. By the end of 2023, the number of the company's comprehensive projects reached 698, an increase of 18.7% over the previous year, including 339/203/81/51/24 in the preclinical/phase II/II/phase II/ commercialization phase. In 2023, the number of new comprehensive projects added by the company reached 132, which is basically the same as in 2022 (136); at the same time, through the “winning molecule” strategy, the company transferred a total of 18 external projects, including 9 post-clinical and commercial production projects. Non-COVID-19 revenue from Phase III and commercialized projects increased 101.7% year-on-year, and the commercial project side continued to make efforts to ensure steady future revenue growth.

Accelerate global production capacity layout and rapidly expand European business

The company accelerated the global production capacity layout, and the integrated CRDMO service center in Singapore officially entered the construction phase, with a design capacity of about 120,000 liters; production capacity at the Irish base climbed better than expected. It is expected to achieve break-even in 2024, and production capacity is close to full production in 2025. The company already has the ability to empower multi-polar partners in many places. The European region has become the company's fastest growing market. Revenue in North America/Europe/China/other regions in 2023 was 80.74/51.40/31.22/699 billion yuan respectively, with year-on-year changes of -5.0%/+101.9%/-16.1%/+37.7%, respectively.

Risk warning: Order delivery falls short of expectations, increased market competition, environmental protection and production safety risks.