Key points of investment:
The 2024 quarterly report was released, and the performance growth was in line with expectations. On the evening of April 22, the company released its 2024 quarterly report. In the first quarter, the company achieved operating income of 356 million yuan (+71.02%); realized net profit of 66 million yuan (+215.65%); and realized net profit without return to mother of 65 million yuan (+179.69%). According to the first quarter results forecast released by the company on April 3, it is expected that 2024Q1 will achieve a profit of 55 to 70 million yuan and net profit of 55 to 70 million yuan after deducting non-return to mother. The actual profit for the first quarter is in line with the forecast range, and the performance growth is in line with expectations.
Choose products independently to achieve rapid growth and enhance the company's profitability. In 2023, the company's self-selected products continued to release some formulations and peptide raw materials. Self-selected products achieved sales revenue of 629 million yuan, an increase of 145.48% over the previous year. The share of revenue increased from 26.9% in 2020 to 60.89% in 2023, achieving breakthrough growth. In 2023, the gross margin of self-selected products was 64.43%, an increase of 3.27 percentage points over the same period last year, mainly brought about by the rapid release of GLP1 series varieties with high gross margins. The company has been deeply involved in the field of peptides for many years, and has accumulated a rich pipeline of major products, including simeglutide and telpotide. It is anticipated that in the next 3 to 5 years, the company's self-selected product business will show rapid growth and contribute to the company's profit flexibility.
Taking advantage of the momentum, matrix BD expansion has borne fruit: the company has continued to strengthen BD team building in recent years, upgrading the sales model from a random model to a mapping model, expanding sales surface and increasing market share through a matrix business development team. The company's BD achievements in 2023 include: (1) signing a GLP-1 innovative drug API CDMO cooperation with a well-known domestic biomedical company and agreeing on a tiered supply price of the API after the customer's terminal preparation is approved for marketing in China; (2) signing a European regional strategic cooperation agreement for simeglutide injections with the customer to provide low-cost and high-quality simeglutide APIs, taking advantage of the customer's formulation production and regional sales promotion advantages; (3) signing a regional strategy with the customer to achieve a win-win situation for oral simeglutide raw materials; (3) signing a regional strategy with the customer for oral simeglutide APIs in Latin America Cooperation agreement. After future products can be commercialized, the customer is designated for exclusive procurement and sales promotion; (4) A CDMO long-term supply contract with a total contract amount of US$102 million was successfully signed with a large European pharmaceutical company, and tiered supply will begin in 2024.
Profit forecast and valuation: Considering the rapid growth of the company's independently selected products, BD expansion has made significant progress. We slightly raised the company's profit forecast. The company's net profit forecast for 2024-2025 is 2.56 million and 378 million (previous values were 2.37 million and 329 million), respectively, with year-on-year increases of 57.1% and 47.8%, respectively, and added the 2026 net profit forecast to 493 million yuan, an increase of 30.4% year on year. Corresponding PE valuations are 46, 31, and 24 times, respectively. Maintain a “buy” rating.
Risk warning: risk of performance fluctuations; increased risk of market competition; risk of falling product prices and sales fluctuations.