Introduction to this report:
The company's performance is growing steadily, and the profit side is growing faster than the revenue side. The release of innovative drugs continues to accelerate, generic drug collection is gradually being cleared, and innovative research and development results are being implemented at an accelerated pace. Maintain an “Overweight” rating.
Key points of investment:
Maintain an “Overweight” rating. Considering that the pace of innovation and transformation continues to accelerate, the 24-25 EPS forecast was raised to 0.90/1.08 yuan (the original forecast was 0.86/1.03 yuan), and the 26-year EPS forecast was added by 1.27 yuan. Maintain a target price of 53.82 yuan, corresponding to 2024 PE 60X, and maintain an increase in holdings rating.
Performance is growing steadily, and the profit side is growing faster than the revenue side. The company's 2023 revenue, net profit, net profit without return to mother was 22.82 billion yuan, 4.302 billion yuan, 4.141 billion yuan, +7.26%, +10.14%, +21.46% year over year; 2023Q1 revenue, net profit to mother, net profit without return to mother of 5.998 billion, 1,369 billion yuan, 1,440 billion yuan, +9.20%, +10.48%, and +18.06% year-on-year, showing a steady growth trend. The profit side is growing faster than the revenue side, and we judge that it is mainly due to improvements in operational efficiency. The sales expense ratios of the 2023 and 2024Q1 companies were 33.20% and 29.42%, respectively, -1.33 pct and -0.99 pct; the net profit margins were 18.85% and 22.82%, respectively, +0.49 pct and +0.26 pct.
The release of innovative drugs continues to accelerate, and the collection of generic drugs is gradually being cleared. In 2023, the company's revenue from innovative drugs reached 10.637 billion yuan (tax included, not including revenue from external licensing), +22.7%. Revenue contributions expanded after new products such as revelumide and darucilil were included in the medical insurance catalogue, and the amount of innovative drugs in stock, such as thiopefigastine and hizripopa, grew steadily, supported by clinical evidence. In 2023, the company's generic drug revenue declined slightly. Sales of products involved in the second batch of procurement renewal and seventh batch of collected products decreased by 702 million and 911 million yuan, respectively, over the same period last year. The risk of collecting generic drugs in subsequent stocks was further clarified.
Innovative research and development results are being implemented at an accelerated pace. In 2023, the company invested 6.150 billion yuan in R&D, -3% year-on-year, which is basically the same. Various innovative pipelines have ushered in a harvest period. For example, the PD-L1 inhibitor adbelimab and the innovative opioid analgesia drug taigilidine were approved for marketing, self-exempt products such as emaxitinib (JAK1) and vanacizumab (IL-17A) are in the NDA stage, and SHR-A1811 (HER2ADC) has entered the clinical registration stage; overseas, the marketing application for carelizumab plus apatinib is already in the FDA review stage.
Risk warning: New drugs entering the hospital fell short of expectations; collection and price reductions exceeded expectations; uncertainty about new drug development.