Brief performance review
On April 22, 2024, the company released its report for the first quarter of 2024. In the first quarter of 2024, the company achieved revenue of 545 million yuan, an increase of 30.05% over the previous year; realized net profit of 129 million yuan, an increase of 53.03% over the previous year; and realized net profit after deduction of 146 million yuan, an increase of 42.90% over the previous year. The net cash flow from the company's operating activities in the first quarter of 2024 was $79 million, an increase of 260.06% over the previous year.
Management analysis
Clinical evidence of hepatitis B cure continues to accumulate, and Pegobin continues to be rapidly dosed. Confirmatory clinical trials with clinical cure as the goal of treatment carried out by the company progressed according to plan. The marketing license application for pegubin combined with nucleoside (acid) analogs for clinical treatment of chronic hepatitis B in adults with increased indications was accepted by the State Drug Administration in March 2024. The company continues to support a number of public welfare and scientific research projects for clinical treatment of hepatitis B and liver cancer prevention, including “Everest”, “Oasis”, “Sprout”, “Starlight”, and “Pilot”. Under the close cooperation and joint efforts of various relevant institutions, the phased results of some projects have been released one after another at the Asia Pacific Liver Disease Research Association (APASL), European Liver Research Society (EASL), and American Society for Liver Disease Research (AASLD) annual meetings, further confirming that all people with hepatitis B have the opportunity to pass interferon based on polyethylene glycol Alpha treatment strategies achieve clinical cure. With the continuous spread of clinical treatment concepts for hepatitis B and the accumulation of scientific evidence, Pegbin has been further recognized by experts and patients. The product continues to be released, and revenue growth continues to be promoted.
Key R&D projects are advancing at an accelerated pace, and the product pipeline is expected to continue to be rich. The company adheres to clinical value as the guide, continuously improves R&D innovation capabilities, and has made key progress in R&D in recent years. Among them, “Y polyethylene glycol recombinant human granulocyte stimulating factor (YPEG-CSF)” was approved for listing on June 30, 2023; “Y polyethylene glycol recombinant human growth hormone (YPEG-GH)” has completed phase III clinical research and was accepted for drug registration in January 2024; AK0706 and human interferon α2b sprays were respectively accepted in January 2024; A drug clinical trial approval notice was obtained in January, and phase I clinical research is currently being carried out. The company's R&D work continues to advance, and the product pipeline is expected to continue to be rich.
Profit Forecasts, Valuations, and Ratings
We maintain profit expectations. We expect the company to achieve net profit of 7.78 (+40%), 10.39 (+34%), and 13.33 (+28%) billion yuan in 2024-2026, corresponding to current EPS of 1.91 yuan, 2.56 yuan, and 3.28 yuan, respectively, corresponding to the current P/E of 34, 25, and 20 times, respectively. Maintain a “buy” rating.
Risk warning
New product approval falls short of expectations; new product sales promotion falls short of expected risk; risk of technical results not being effectively transformed.