Introduction to this report:
Chemical pharmaceuticals are under pressure in the short term, and the traditional Chinese medicine sector is expected to continue to grow by building brand strength. Innovative drugs and high-end complex formulations are expected to be realized one after another, driving the company's high-quality long-term development and maintaining the “gain” rating.
Key points of investment:
Maintain an “Overweight” rating. 2023 revenue of $12.430 billion (-1.6%), net profit to mother of $1,954 million (+2.3%), net profit of non-return to mother of $1,881 billion (+0.1%). 2023Q4 achieved revenue of 2.75 billion yuan (-11.7%) in a single quarter, net profit attributable to mother of 352 million yuan (-12.6%), and net profit of 306 million yuan (-17.7%) after deducting non-return to mother. Considering that the company was affected by the price reduction of iprazole, the 2024-2025 EPS forecast was lowered to 2.40/2.70 yuan (originally 2.44/ 2.80 yuan), and the 2026 EPS forecast was added to 3.09 yuan. Referring to the comparable company, the 2024 PE 18X was raised, and the target price was raised to 43.17 yuan (+2.13), optimistic about the company's future innovation and transformation plan, and maintain an increase in holdings rating.
Chemicals are under pressure in the short term, and the traditional Chinese medicine sector is expected to continue to grow. ① The chemical formulation segment generated revenue of 6.57 billion yuan (-6.1%). Among them, digestive tract product revenue of 2,903 billion yuan (-15.5%) is due to the impact of hospital environmental austerity and price reduction. It is expected to continue to be affected by price cuts in the first quarter and is expected to grow through volume supplements throughout the year; revenue from pro-sex hormone products is 2,767 billion yuan (+6.8%), and leuprorelin acetate microspheres account for a high proportion of revenue. After provincial collection, volume compensation is expected to grow rapidly this year; ② Sales of APIs and intermediates are expected to grow rapidly this year; Revenue from APIs and intermediates is 3,553 billion yuan (+3.7%), optimistic about future pet medicines Increased market share and high-end Dosage of antibiotics. ③ Revenue from traditional Chinese medicine formulations was 1,745 billion yuan (+39.2%), with significant growth. Thanks to the rapid distribution of antiviral granules in the online and retail layout, other varieties in the Chinese medicine sector are expected to continue to gain strength, and Shenqi Fuzheng Injection is expected to be further released after canceling the tumor restrictions on the medical insurance catalogue.
Innovative drugs and high-end complex formulations will be realized, driving the company's high-quality long-term development. In 23, a new indication for iprazole (stress ulcer bleeding) was approved for marketing, tripraline microsphere 1M prostate cancer was approved for marketing, and stage III of endometrial cancer was completed and submitted for CDE approval. Aripiprazole microsphere 1M has submitted an NDA and is expected to be approved before 2025H1. Simeglutide diabetes indications are expected to be submitted for NDA in 24 years, and clinical trials of weight loss indications are pending approval of the original research. The recombinant human IL17A/F antibody head is undergoing phase III of touscuchiumab. It is expected that phase III data will be read out and NDA submitted at 25H1.
Catalysts: New product release climbs slope, excellent clinical results
Risk warning: changes in domestic pharmaceutical policies; clinical trial results fall short of expectations