Incidents:
On March 20, the company released its 2023 annual report. In 2023, it achieved operating income of 14.566 billion yuan, an increase of 15.35% over the previous year; realized net profit of 4.532 billion yuan, an increase of 9.47% over the previous year; net profit after deducting non-return to mother was 4.516 billion yuan, an increase of 9.63% over the previous year. The fourth quarter achieved revenue of 3.884 billion yuan in a single quarter, up 30.30% year on year; net profit to mother was 920 million yuan, up 36.12% year on year; net profit after deducting non-return to mother was 899 million yuan, up 30.72% year on year.
Reviews:
The growth hormone sector is progressing steadily, and new businesses are growing rapidly
In 2023, the subsidiary Jinsai Pharmaceutical achieved revenue of 11.084 billion yuan, an increase of 8.48% over the previous year; achieved net profit of 4.514 billion yuan, an increase of 7.04% over the previous year, continuing to promote the market's acceptance of the efficacy and safety of long-term growth hormone, effectively increasing the revenue level and performance share of long-term products. Growth hormone-related dosage forms won the bid for collection in Zhejiang Province in 2023. In 2023, the company also established five new BUs: Pediatric Comprehensive, Women's Health, Adult Endocrinology, Dermatology, and Oncology to help diversify the business. The subsidiary Baike Biotech achieved revenue of 1,825 billion yuan, an increase of 70.30% over the previous year. The launch of a new type of herpes zoster vaccine became a new profit growth point for the company.
Increase investment in R&D and continuously improve the R&D agency
In 2023, the company's sales expenses rate reached 27.26%, a year-on-year decrease of 2.89pcts; the management expense ratio reached 6.57%, a slight increase of 0.05pcts; the R&D expenses rate reached 11.83%, an increase of 1.07pcts year-on-year, mainly due to the company rapidly increasing R&D investment and continuously improving the R&D network. In 2023, the company had 1,329 relevant R&D personnel, including 198 PhDs. The subsidiary Baike Biotech has accelerated the construction of an “mRNA vaccine technology platform” to form five core technology platforms to effectively promote the development and layout of various mRNA vaccines.
The research pipeline continues to advance, and the clinical progress of many new products is progressing smoothly
In 2023, the company has focused on developing 11 products. Among them, injectable kinazumab (in terms of acute gout arthritis), gintuximab-gastric cancer indications, and FSH-CTP (follicle-stimulating hormone-C-terminal fusion peptide) have entered phase III clinical phase. Water-soluble progesterone injections have completed GMP compliance checks at registration sites and production sites, and are currently in the ANDA reporting stage, which is expected to contribute new profit growth points to the company.
Profit forecast: We forecast that the company's revenue for 2024-2026 will be 169.22/194.88/20.425 billion yuan respectively (the value before 2024/2025 was 174.01/20116 billion yuan, respectively), and the estimated net profit to mother will be $55.44/64.24/6.386 billion yuan (the value before 2024/2025 was 61.42/7.161 billion yuan, respectively). The downgrade is due to growth hormone entering volume procurement in some regions and maintaining a “buy” rating.
Risk warning: risk of changes in industry policies, risk of product development not meeting expected benefits, product sales promotion falling short of expectations, risk of not winning the bid for core product collection