Short-term results are under pressure, and I am optimistic that future risks will be cleared
The company's revenue for the year 23 was 1,412 million yuan (+21.73% yoy); of these, 4Q23 achieved revenue of 410 million yuan (+26.74% yoy) and the mother of 0.26 million yuan (+74.98% yoy), in line with the performance report expectations; the company's 1Q24 revenue was 213 million yuan (+10.34% yoy), and the mother was 0.22 million yuan (+4.75% yoy). Growth in 4Q23-1Q24 has slowed due to Kailiwei's grassroots direct sales project cycle and patient introduction cycle factors, as well as the delayed execution pace of Kim Shu-hee's collection, and performance fell short of market expectations. Considering that the first quarter has historically been a period of poor company performance, the company's growth potential will need to be further verified after the 2nd-3rd quarter collection risks are fully cleared. The company is expected to return 1.6/2.0/290 million yuan in 24-26, and the corresponding EPS is 0.93/1.17/1.69 yuan. Based on the SOTP method, the company was valued at 8.3 billion yuan, corresponding to a target price of 48.72 yuan, maintaining the purchase rating.
Kailliwei dosage continues to increase in quantitative benefits. The acceleration in the second quarter is expected to show that the Kailiwei hepatitis C pan-genotype was included in medical insurance in '23. Innovative direct sales at the grassroots level have shown remarkable results in accelerating dosage.
Sales were 400 million in 23 years (up more than 200% year on year), and net profit margin rose rapidly (1H23 ~ 18%, 23 full year 22%). Considering the impact of the primary direct sales project cycle and patient introduction cycle (6-month cycle, first batch starting in 2Q23), 4Q23-1Q24 has slowed down, and we expect Kailiwei to accelerate in 2Q24.
Kim Soo-hee's collection is under pressure and needs to resume later
Kim Soo-hee's harvesting landed moderately (only 21% reduction), and bid supplement+collection volume+natural growth helped sales return to a growth trajectory. The volume portion (winning the total bid of 170 million) is expected to increase profits. Affected by the pace of interferon collection execution in Jiangxi, the volume of goods received by 1Q agents dropped significantly, and is expected to return to normal in the future as collection is carried out.
Long-acting interferon is about to be produced, and the future can be expected
Long-acting interferon phase III clinical trials have come to an end, clinical centers are being closed one after another, and data is being compiled. We expect to report NDA on 2Q-3Q24. It is estimated that the functional cure rate for hepatitis B can reach 20-30% (3-7% of past treatments). We believe that the new treatment has breakthrough potential and is approved as a probable event.
Optimistic about returning to rapid growth in the future
The company is in a critical period of switching from generic drugs to innovative drugs. While Jin Shuxi, who accounts for the majority of revenue, is under pressure from both the pace of collection execution and the Kailliwei project cycle, it continues to grow, which fully reflects the company's growth resilience. It is optimistic that the risks of subsequent collection will be fully clarified, and the company will return to rapid growth.
Risk warning: Clinical data or progress of long-acting interferon falls short of expected risk; Kailiwei dosage falls short of expected risk; risk of harvesting effects exceeding expectations.