The business is growing rapidly, and the forward-looking integrated layout highlights the company's competitive advantage. According to the company's performance announcement, in 2023, the company achieved operating income of 1,224 million yuan, an increase of 114.4% year on year; achieved gross profit of 560 million yuan, an increase of 114.3% year on year, gross profit margin of 26.3%; achieved adjusted net profit to mother of 412 million yuan, an increase of 112.1% year on year, and an adjusted net interest rate of 19.4%.
Looking at the split, pre-IND services achieved revenue of 927 million yuan, an increase of 43.6% over the previous year; post-IND services achieved revenue of 1,197 billion yuan, an increase of 56.4% over the previous year.
Empower people to follow and win, and use technology and platform advantages to maintain customer stickiness. According to the company's results announcement, the company has 143 ongoing projects; a total of 15 ADC IND applications were submitted for customers during 2023. Currently, the company has discovered a total of 427 projects, 59 ongoing post-IND bioconjugation projects, and 5 production process verification PPQ projects. It is expected that new drug marketing applications will soon be submitted. The share of revenue gradually increased after IND, opening up room for future growth.
Industry demand and company projects are in hot demand, and production capacity continues to advance. According to the company's performance announcement, after the opening of production capacity in September and December '23, the Wuxi base has become an integrated production capacity base, laying out different links in the XDC drug development and production value chain. Construction of production capacity for four production lines in Singapore has begun, and GMP compliant operations are expected to commence in 2026.
Profit forecasting and investment advice. The adjusted net profit of the company in 2024-2026 is estimated to be 611/920/1,394 million yuan, respectively, with growth rates of 48.2%/50.5%/51.6%, respectively; the corresponding adjusted PE is 32.2/21.4/14.1 times, respectively. Referring to comparable companies and their position and growth in the industry, the company is currently the world's leading ADC CRDMO company, with rich project reserves and strong subsequent growth, and an integrated and comprehensive layout. Maintain the reasonable value of the company at HK$21.28 per share and maintain a “buy” rating.
Risk warning. Talent/management loss risk, customer loss risk, geopolitical risk.