occurrences
The company announced 2023 results: In 2023, the company's revenue was 17.034 billion yuan, up 11.6% year on year, and revenue from non-COVID-19 projects was 16.51 billion yuan, up 37.7% year on year. Gross profit margin of 40.1% (-3.9pp), adjusted net profit of 4.70 billion yuan, a year-on-year decrease of 4.6%, and adjusted net profit margin of 27.6% (-4.7pp).
reviews
The company's pipeline funnel continues to grow, and the number of new projects in 2023 reached one of the best levels in history. By the end of 2023, the total number of pipeline funnel elements in the company reached 698, with 132 new projects added in 2023. The number of new projects has begun to recover since the second quarter of 2023. In the pipeline funnel, there are 24 commercialization projects, 51 phase 3 clinical projects, and 81 phase 2 clinical projects. Transferred to 18 external projects, including 9 post-clinical and commercial production projects.
We believe that phase III clinical trials and commercialization projects will lay the foundation for future commercial production revenue growth.
Revenue increased rapidly during phase III clinical and commercialization stages. In 2023, pre-clinical revenue was 5.4 billion (+9.2%), and pre-clinical revenue growth is expected to gradually resume as more projects are signed in the fourth quarter. Early-stage clinical revenue of 3.6 billion (+12.7%). In 2023, revenue from phase III clinical and commercialization projects was 7.7 billion (+12.8%), of which revenue from non-COVID-19 projects increased 101.7% year over year.
There are plenty of orders in hand. By the end of 2023, the total number of outstanding orders reached $20.6 billion, including $13.4 billion for service orders, $7.2 billion for milestone payments, and $3.85 billion for outstanding orders over three years. In 2023, Milestone and Research Services generated more than $87 million.
Capital expenditure continues to grow and maintain positive cash flow targets. The capital expenditure in 2023 is approximately 4.1 billion yuan, mainly for capacity expansion in Europe and the US. Capital expenditure is estimated to be around $5 billion in 2024. In 2023, positive free cash flow was generated for the full year of the year of approximately 600 million yuan. Maintain positive free cash flow targets in 2024.
We expect Yao Ming Biotech's revenue for 2024-2026 to be 184.80, 213.09, and 25.627 billion yuan, respectively, with year-on-year growth rates of 8%, 15%, and 20%. Adjusted net profit will be 48.4 (previous value 53.5), 56.1 (previous value 69.6), and 7.18 billion yuan, respectively, with year-on-year growth rates of 3%, 16%, and 22%. The company is in a leading global position in macromolecular CRDMO. The business model is excellent. All technology platforms (monoclonal antibody, double antibody, XDC, vaccine, microorganism, etc.) have competitive advantages in the field of segmentation, but considering the uncertainty of the external environment, the international trade environment, and the recovery and financing boom in biomedical investment and financing will still take time to transfer to the performance side, we adjusted the company 25 times PE in 2024 (originally 35x), calculated based on the Hong Kong dollar exchange rate of 0.92, corresponding to a target market value of HK$131.5 billion, reducing the target price to HK$30.88, maintaining “superior” “Big Market” rating.
Risk warning: geopolitical risk, risk of global biomedical investment and financing decline, risk of global biopharmaceutical CDMO competition increasing risk, risk of customer pipeline development progress falling short of expectations, risk of company project quality execution, risk of capacity utilization falling short of expectations, risk of loss due to capacity expansion, etc.