Incident summary
The company announced its 2023 annual results on March 25, 2024. In 2023, it achieved revenue of 2,124 million yuan, up 114% year on year; adjusted net profit of 412 million yuan, up 112% year on year; gross profit of 560 million yuan, up 114% year on year; adjusted net interest rate of 19.4%, and gross margin of 26.3%. The company made further breakthroughs in its business after listing, compounded by the boom in the global ADC industry. As of December 31, 2023, the company's total number of outstanding orders was US$579 million, an increase of 81.9% over the previous year.
Key points of investment
The “Empower, Follow, and Win Elements” strategy drives rapid growth in the number of projects and rapid progress in the global business layout
By the end of 2023, the company had undertaken a total of 143 comprehensive projects, an increase of 52.1% year on year; the total number of phase II and late-stage projects was 21, of which 5 PPQs are expected to be submitted soon; the total number of pre-clinical and phase I projects was 122, an increase of 45.2% year on year. The company has completed IND project applications for 15 ADC drug candidates and has cooperated with six of the top ten global pharmaceutical companies. The number of service pipelines and global customer reputation have increased rapidly.
Integrated services helped the project advance rapidly. The revenue growth rate of each sector was clearly divided according to the project development stage. Pre-IND services in 2023 were 927 million yuan, up 143.20% year on year, accounting for 43.6%; post-IND services were 1,197 million yuan, up 96.45% year on year, accounting for 56.4%. By region, North America's revenue in 2023 was 852 million yuan, up 91.48% year on year, accounting for 40.1% (-4.8pp); China's revenue was 661 million yuan, up 115.98% year on year, accounting for 31.1% (-0.2pp); European revenue was 498 million yuan, up 183.97% year on year, accounting for 23.4% (+5.7pp).
Accelerate the release of global production capacity and continue to expand capacity to empower global customers
① The production base in Wuxi covers an area of 48067 square meters. The design capacity of the dual-function xMAb/xBcm2 facility that has been put into operation is 200 liters to 2000 liters of mAb intermediates per batch or 2000 liters of APIs per batch. The second production line is expected to be put into operation in the fourth quarter of 2024.
② The Changzhou production base covers an area of 819 square meters, is equipped with OEB5 production facilities and reactors that meet GMP standards. It has a production capacity of up to 150 liters per batch, and has the capacity to produce kilogram connectors and payloads
③ The Singapore production site covers an area of 22,000 square meters. Construction of four production line facilities has begun, and GMP compliant operations are expected to begin in 2026.
Profit forecasting
We are optimistic that the company is in a stage of rapid growth. We expect the company's revenue for 2024-2026 to be RMB 31.27/46.68/RMB 6.465 billion, respectively, and net profit to mother of RMB 569/918/1,323 million yuan, respectively, maintaining a “buy” rating.
Risk warning: risk of increased market competition, risk of R&D expenses, risk of capacity expansion, risk of doing business with overseas customers and international expansion