A leading peptide racetrack company with a full industrial chain layout, rapidly expanding the optional product business, and opening up growth space, Nuotai Biotech is a leading domestic peptide racetrack company. It has laid out the entire upstream and downstream peptide industry chain and expanded its customized R&D and production business through the acquisition of Sano Australia. With the rapid expansion of the company's optional product business, the 2023 performance was impressive. In the short term, peptide drugs represented by simeglutide catalyze the release of downstream demand, and the API business is expected to accelerate growth; large orders for the CDMO business are about to be executed, unleashing growth potential in the later stages of the R&D pipeline. In the medium to long term, the company continues to promote peptide production capacity and forward-looking layout of the highly prosperous oligonucleotide business, which is expected to open up room for growth. We are optimistic about the long-term development of the company. We expect the company's net profit to be 2.47/3.27/435 million yuan in 2024-2026, EPS is 1.16/1.53/2.04 yuan, and the current stock price corresponds to PE of 44.6/33.7/25.4 times. This is covered for the first time, giving it a “buy” rating.
Major GLP-1 products are appearing frequently, and the catalytic peptide industry chain is booming. In recent years, the development of GLP-1 drugs has been on the rise. Major single products such as simeglutide and tirpotide have appeared frequently, focusing on chronic diseases with a large patient base such as type 2 diabetes and obesity. Global annual sales are rising rapidly, and it has also attracted more companies to lay out GLP-1 drug pipelines. Currently, most GLP-1 products that have been marketed and are in the research stage are peptides. With the rapid release of the downstream market and the advancement of pipelines, pharmaceutical companies' demand for upstream peptide production capacity has increased dramatically, and leading companies related to the domestic peptide industry chain are expected to receive more orders with their strong development capabilities and high-performance products, and will enter a period of rapid development.
The production capacity of peptide APIs has reached the tonnage scale, and downstream demand continues to rise and the growth momentum is strong. Currently, the production capacity of peptide APIs has reached the tonnage scale. The 601 peptide API workshop is expected to be put into operation by the end of 2025, and the production capacity will reach several tons at that time. The company's customized R&D and production business has served a variety of major innovative pharmaceutical products, and the CDMO long-term supply contract of US$102 million will begin to be executed in 2024; as the R&D pipeline continues to advance to the back end, it is expected that the CDMO business will usher in a period of rapid development.
At the same time, the company's forward-looking layout has broken through the technical bottleneck of large-scale production of long-chain polypeptide drugs; in 2023, strategic cooperation agreements for simeglutide APIs were signed with European customers and Latin American customers, and the API and intermediates business has grown by leaps and bounds.
Risk warning: Competition in the industry intensifies, the volume of optional products falls short of expectations, and the implementation of production capacity falls short of expectations.