Business resilience was demonstrated in the face of headwinds, and revenue continued to grow steadily. According to the company's annual report, in 2023, the company achieved operating income of 17.03 billion yuan, an increase of 11.6% year on year; achieved adjusted net profit of 4.95 billion yuan, a decrease of 2.0% year on year; total business achieved a 37.7% year-on-year increase in non-COVID-19 revenue; achieved adjusted net profit of 4.699 billion yuan to mother, a decrease of 4.6% year on year, and adjusted net interest rate of 27.6% to mother. Despite the global slowdown in biotechnology, pre-clinical revenue increased 9.2% year over year; early-stage clinical revenue increased 12.7% year over year; in the face of a sharp decline in COVID-19 revenue, non-COVID-19 phase III clinical and commercial revenue increased 101.7% year over year.
The number of new projects exceeded expectations, and uncompleted orders continued to drive future revenue growth. According to the company's annual report, the company won 18 external transfer projects, including 7 phase III clinical projects and 2 commercialization projects. As of December 31, the company had reserved 51 phase III clinical trials and 24 commercialization projects to lay the foundation for future revenue growth; the total number of outstanding orders was US$20.6 billion, and the total number of uncompleted orders was approximately US$3.9 billion within three years.
Production capacity empowers customers around the world, and the Irish base's production capacity climbed better than expected. According to the company's annual report, the company has 3 drug development centers, 8 drug development centers, and 9 production bases.
Construction of the Irish production capacity base has been accelerated, and there will be commercial production demand starting in 2024. Production capacity is expected to be close to full production in 2025; 70% of these projects stem from winning molecular strategies, and the Irish factory is expected to achieve break-even in 2024.
Profit forecasting and investment advice. The company's adjusted net profit for 2024-2026 is estimated to be 45.72/52.97/6.125 billion yuan, respectively, with growth rates of -2.7%/15.9%/15.6%, respectively, and 11.5X/9.9X/8.6X corresponding to 24-26E adjusted PE, respectively. Referring to comparable companies and their position and growth in the industry, the company was given a 24-year adjusted net profit estimate of 15XPE, corresponding to a reasonable value of HK$17.42 per share for the company, and a “buy” rating.
Risk warning. R&D progress falls short of expectations; the number of new projects is slowing down; geopolitical risks, etc.