The company announced 2023 results: achieved revenue of 17 billion yuan in 2023 (yoy +11.6%); gross profit margin of 40.1%, yoy-3.9pct; realized net profit of 3.4 billion yuan (yoy -23.1%); adjusted net profit to mother of 4.7 billion yuan (yoy -4.6%). Among them, the second half of 2023 achieved revenue of 8.54 billion yuan (yoy +6.0%); net profit to mother was 1.13 billion yuan (yoy -40%); and adjusted net profit to mother was 1.86 billion yuan (yoy -11%).
Non-COVID-19 projects continued to drive steady business growth: revenue from non-COVID-19 projects increased 37.7% year over year in 2023, with revenue from post-clinical and commercial projects increasing 102% year over year. In terms of number of projects, the number of non-COVID-19 commercialized projects continues to grow, from 11 in 2022 to 16 in 2023.
“R+D+M” troika long-term drive:
Before IND: Achieved revenue of 5.40 billion yuan (yoy +9.2%), 339 pre-clinical development projects, and successfully advanced 61 pre-clinical development projects to early clinical trials in 2023.
After IND: 1) Clinical Phase I/II: Benefiting from the resumption of clinical trials after COVID-19, achieved revenue of 3.62 billion yuan (yoy +12.7%) in 2023, with a net addition of 37 and 13 clinical phase I and phase II projects; 2) Clinical Phase III/Commercialization: Achieved revenue of 7.73 billion yuan (yoy +12.8%) in 2023. By the end of 2023, the company had 51 clinical phase III and 24 commercialization projects.
Backlog maintained a high level, supporting long-term growth: the total number of outstanding orders grew to $20.6 billion, which was roughly the same as in the same period in '22; of this, $13.4 billion was uncompleted for service orders and $7.2 billion for uncompleted potential milestone payments; in addition, 81% of orders were outstanding for more than 3 years.
The field of new technology continues to expand, and it is expected that the company will win more early projects: 1) XDC: In November 2023, it was spun off and listed on the Hong Kong Stock Exchange. By the end of 2023, there were a total of 570 service projects (yoy +45%), of which 21 are phase II/III. Currently, 5 PPQ projects are about to be submitted to BLA; 2) Dual antibody, fusion protein, and vaccine projects have reached 114, 72, and 25 respectively.
2024 outlook: Considering the uncertainty of the external environment, the company expects an apparent revenue growth rate of 5-10% in 2024, excluding the COVID-19 revenue growth rate of 8-14%. At this point, benefiting from the recovery of global investment and financing, the number of orders signed by the company showed a good trend. As of March 22, 2024, 25 new projects were added, significantly higher than the 8 in 2023Q1.
Investment advice: We are optimistic about the company's CRDMO business model. The leading technology platform enhances global competitiveness, the new base is gradually put into operation, and the capacity utilization rate is increasing. Considering the uncertainty of the external environment and geopolitics, we expect the company's net profit for 2024-2026 to be 36/40/4.6 billion yuan, respectively, and the corresponding PE is 15/13/12 times, respectively, adjusted to an “increase in holdings” investment rating.
Risk warning: Risks such as geopolitics, exchange rate fluctuations, and investment and financing environment fluctuations.