The company released its 2023 annual report: the company achieved revenue of 1,503 billion yuan in 2023, an increase of 3.4% year on year; net profit to mother was 2.283 billion yuan, a year-on-year decrease of 105 million yuan; net profit without return to mother was 2.298 billion yuan, a year-on-year decrease of 153 million yuan. The company currently commercializes 3 drugs, and the increase in drug sales revenue is driving performance growth. The core product treprilizumab achieved sales revenue of about 919 million yuan in 2023, an increase of about 25% over the previous year.
A breakthrough has been made in internationalization, and PD-1 can be expected to be commercialized overseas. In October 2023, the company triplizumab was approved for marketing by the US FDA for full-line treatment of advanced nasopharyngeal cancer. According to the company's performance promotion materials, the sale of treprilizumab for nasopharyngeal cancer indications in the US is expected to reach a peak sales of US$200 million within 2.5 to 3 years. At the same time, the European Union, the United Kingdom, Australia, etc. have successively accepted marketing applications for treprilizumab, and the company continues to expand its global commercialization network to help expand overseas sales of treprilizumab.
Insist on investment in innovation and accelerate the progress of core pipeline research and development. The company continues to improve quality and efficiency, focusing on core pipelines. R&D expenses in 2023 were 1,937 billion yuan, a year-on-year decrease of 18.7%. (1) The global FIC drug anti-BTLA monoclonal antibody independently developed by the company initiated international multi-center phase III clinical research; (2) the PCSK9 monoclonal antibody is in the marketing application stage, and the IL-17A monoclonal antibody has entered the phase III clinical research stage; (3) At the same time, the company accelerated the development progress of early high-quality pipelines such as JS107 (CLND18.2 ADC) and JS207 (PD-1/VEGF).
Profit forecasting and investment advice. We expect the company's revenue for 24-26 to be $20.27, 30.33 and $4.108 billion, respectively. Using the risk-adjusted DCF valuation method, the reasonable value of the company's A shares was 52.09 yuan/share. Considering the A/H share valuation premium, it corresponds to HK$19.37 per share for Hong Kong stocks, and maintains the “buy” ratings for A shares and Hong Kong stocks.
Risk warning. The overseas commercialization process fell short of expectations, progress in the research pipeline fell short of expectations, commercialization of new drugs fell short of expectations after marketing, and market competition increased risks.