Incident Overview
The company achieved operating income of 5.04 billion yuan (yoy +17.3%) in 2023; realized net profit attributable to shareholders of listed companies of 1.04 billion yuan (yoy +15.1%), after deducting non-net profit of 1.01 billion yuan (yoy +16.1%);
Among them, 23Q4 achieved revenue of 1.39 billion yuan (yoy +17.6%), net profit to mother of 150 million yuan (yoy -4.9%), and deducted non-net profit of 130 million yuan (yoy -0.4%). The performance was in line with our expectations.
Focus on investing in high-potential products to lead the concept of analgesia and sedation treatment in the field of anesthesia and severe illness
In 2023, the company's industrial sector revenue was 4.220 billion yuan (yoy +14.8%), of which:
1) Anesthesia Line: Achieved revenue of 2.70 billion yuan (yoy +24.3%) in 2023, accounting for 53.6% of total revenue; recently approved anesthetic products (remifentanil, sufentanil, oxycodone, etc.) achieved rapid growth; 2) Mental Line: achieved revenue of 1.09 billion yuan (yoy +3.7%), accounting for 21.7% of total revenue; product revenue gradually declined due to collection, and some products that had already been collected and products with lower prices rebounded in price during contract renewal; 3) Neurology: achieved revenue of 130 million yuan (yoy )- 32.2%), accounting for 2.5% of total revenue; as the impact of collection gradually subsides, we expect positive revenue growth in 24 years. Looking ahead to 24 years, the company will continue to explore the county grassroots and sleep markets by sinking the anesthetic, psychiatric, and neurological products business to ensure the rapid growth of uncollected products. At the same time, revenue from psychotropic products that have previously been included in collection will gradually resume growth. The company is focusing on strengthening hospital access after new products are launched, and the industrial sector is expected to achieve high revenue growth.
The research pipeline continues to advance, accelerate central nervous system drug research and development companies to increase investment in innovative drug research and development, and actively promote consistent evaluation of generic drugs. It has more than 70 research projects and invested 614 million yuan in R&D expenses (yoy +23.92%). As of the 2023 annual report, the company has more than 20 innovative drug projects under development, including 1 phase II clinical research project (NH600001 emulsion injection), completed 3 phase I clinical research projects (NH102 tablets, NHL35700 tablets, and YH1910-Z02 injections); carried out 4 phase I clinical research projects and obtained 1 clinical approval. It is expected that 3 clinical applications will be submitted in 2024, and the remaining projects are in the pre-clinical research phase. 41 generic drug projects were carried out, 2 production approvals were obtained, 10 projects were reported for production under review, and 14 consistency evaluation projects were carried out.
Profit forecasting and investment advice
The company has the richest central nervous system drug product line in China. Out of a total of 22 subcategories, the company has covered 14 categories of products; due to the impact of the medical environment, we adjusted the profit forecast: we expect the company to achieve operating income of 60.39/7.164 billion yuan (original value of 6284/7.476 billion yuan) in 2024-2025, up 19.8%/18.6% year-on-year respectively, with corresponding net profit attributable to mother of 1,275/1,586 billion yuan (original value of 1,379/1,701 billion yuan), respectively. It increased by 23.0%/24.4%, adding 2026 revenue to $8.252 billion, and net profit to mother of $1,923 billion. The corresponding EPS was 1.27/1.57/1.91 yuan, corresponding to the closing price of 22.34 yuan on April 9, 2024, and PE was 18/14/12 times, respectively, maintaining the “gain” rating.
Risk warning
There is a risk that changes in industry policies will exceed expectations, the risk that the progress of drug research and development innovation will fall short of expectations, the risk that the growth rate of major varieties will slow down, and quality control risks.