Incidents:
On March 29, 2024, Tebao Biotech released its 2023 annual report: the company's revenue in 2023 was 210 billion yuan (yoy +37.55%), net profit attributable to mother 555 million yuan (yoy +93.52%), after deducting net profit of 579 million yuan (yoy +73.58%).
Investment highlights:
The company's performance grew rapidly in 2023. In 2023, the company's revenue was 210 billion yuan (yoy +37.55%), net profit attributable to mother was 555 million yuan (yoy +93.52%), and net profit not attributable to mother was 579 million yuan (yoy +73.58%). In 2023, Q4's revenue was 641 million yuan (yoy +66.93%), net profit attributable to mother was 187 million yuan (yoy +115.37%), after deducting non-return net profit of 169 million yuan (yoy +86.78%).
Pegbin drives high revenue growth, and higher gross margins and lower sales expense ratios drive higher net profit margins. In 2023, Pegbin's sales revenue was 1.79 billion yuan (yoy +54.21%), driving the company's revenue to continue to grow rapidly. At the same time, Pegbin's gross margin increased by 6.03 pct year-on-year due to reduced patent royalties. In 2023, the sales expense ratio decreased by 5.64 pct year on year, the management expense ratio increased by 0.95 pct year on year, the R&D expense ratio increased by 1.14 pct year on year, and the net profit margin increased 7.65 pct year on year.
In Q4 2023, the company's revenue increased by more than 60% year on year, and the net profit margin increased. In Q4 2023, the company's revenue was 641 million yuan, up 66.93% year-on-year. In 2023, Q4 gross margin increased by 5.07 pct year on year, sales expenses ratio decreased by 2.23 pct year on year, management expense ratio decreased by 1.9 pct year on year, R&D expenses increased 0.87 pct year on year, and net profit margin increased 6.55 pct year on year.
Increase investment in R&D and continue to deliver innovative products. In 2023, the company invested 280 million yuan in R&D, an increase of 34.96% over the previous year. The national class 1 new drug developed by the company, “topefigastine injection” (trade name: pejin), a next-generation long-acting recombinant human granulocyte colony stimulating factor, was approved for marketing on June 30, 2023. The marketing license application for Pegobin combined with nucleoside (acid) analogs for clinical treatment of adult chronic hepatitis B with increased indications was accepted by the State Drug Administration in March 2024. The Y-polyethylene glycol recombinant human growth hormone (YPEG-GH) project completed phase III clinical research, and the drug registration application was accepted in January 2024; Y-type polyethylene glycol recombinant human erythropotropin (YPEG-EPO) has completed phase II clinical research.
Profit forecast and investment rating We estimate that in 2024/2025/2026, the company's revenue will be 2,881 billion yuan/3,945 billion yuan/5.251 billion yuan, net profit to mother 776 million yuan/1,096 billion yuan/1,504 billion yuan, and the corresponding PE is 33.38X/23.64X/17.23X. We believe that the company's long-term protein modification technology platform is deep, the product pipeline is rich, the rapid release of long-acting interferon, and the launch of long-acting human granulocyte stimulating factors contribute to the increase. Affected by no longer paying patent royalties and sales expense controls, we raised the company's 2024-2025 performance forecast. Maintain a “buy” rating.
Risks suggest that new hepatitis B patients are being enrolled less quickly than expected, clinical trial results and progress fall short of expectations, risk of product price changes exceeding expectations due to policy changes, risk that promotion and sales of new products fall short of expectations, risk of market competition increasing the risk of exceeding expectations, and the risk of changes in cooperation with suppliers of intellectual property rights and raw materials.