Brief performance review
On April 17, 2024, the company released the 2023 Annual Report and 2024Q1 Report.
In 2023, the company achieved revenue of 22.82 billion yuan (+7.26%, same period below); net profit to mother of 4.302 billion yuan (+10.14%); net profit after deducting non-return to mother of 4.141 billion yuan (+21.46%). Looking at a single quarter, the company achieved revenue of 5.806 billion yuan (+8.9%) in Q4 of 2023; net profit to mother of 829 million yuan (+13.3%); net profit after deducting non-return to mother of 781 million yuan (+118.2%). Q1 2024 revenue of $5.998 billion (+9.2%); net profit attributable to mother of $1,369 million (+10.48%), net profit of non-attributable net profit of $1,440 million (+18.06%).
Management analysis
The results of innovation and transformation are gradually being realized. With the continuous release of marketed drugs, innovative drugs are gradually becoming the main driving force for the company's performance growth. In 2023, the company's innovative drug revenue reached 10.637 billion yuan (excluding external licensing revenue), an increase of 22.1% over the previous year, accounting for 41.61% of total revenue. In addition, the company promoted approval for marketing of 3 Class 1 innovative drugs (adbelimab, reguglitin phosphate, orteconazole) and 4 new Class 2 drugs (dexmedetomidine hydrochloride nasal spray, abiraterone acetate nanocrystals, irinotecan hydrochloride liposomes, and henglyzine metformin sustained-release tablets) last year.
The company's external BD is speeding up, and the product is about to go overseas. In 2023, the company and a number of overseas pharmaceutical companies reached a total of 5 external licenses, with a total transaction amount exceeding US$4 billion. The products involved include the EZH2 inhibitor SHR2554, the TSLP monoclonal antibody SHR-1905, the HER1/HER2/HER4 targeted drug pyrrolitinib maleate, the PD-1 inhibitor carrilizumab liver cancer combination therapy, the PARP inhibitor HRS-1167, and Claudin 18.2 ADC SHR-A1904, including PARP inhibitors and Claudin 18.2 ADC. 18.2 Both ADCs were authorized to Merck, Germany. This is the first time that the company has reached a strategic cooperation with a major global multinational company, and the total transaction amount can reach 1.4 billion euros. Furthermore, in July 2023, the BLA application for carrilizumab combined with apatinib for first-line treatment of advanced liver cancer was accepted by the US FDA. The target review date is May 31, 2024, and overseas commercialization is about to begin. At the same time, several of the company's projects have obtained clinical trial qualifications in countries and regions such as the United States, Europe, and Asia Pacific. Six ADCs, including HER2 ADC, Claudin 18.2ADC, TROP2 ADC, CD79b ADC, and Nectin-4 ADC, as well as innovative cancer products such as PVRIG-TIGIT dual antibodies, as well as innovative non-tumor drugs such as SHR-1707 (anti-Aβ monoclonal antibody) and Edralbrutinib have all achieved simultaneous research and development at home and abroad.
Profit Forecasts, Valuations, and Ratings
We are optimistic about the company's development prospects. We expect that in 2024/2025/2026, the company's revenue will be 276/322/37.7 billion yuan, up 21%/17% year on year; net profit to mother will be 5.5 billion yuan/6.6 billion yuan/8.2 billion yuan, up 28%/20%/23% year on year, maintaining the “buy” rating.
Risk warning
There are risks such as clinical research and development falling short of expectations, risks of sales falling short of expectations due to increased competition, falling short of expectations in the internationalization process, and excessive declines in selected products.