Key points of investment
Incident: The company released its 2023 annual report, and achieved revenue of 22.82 billion yuan (+7.26%, year-on-year growth rate in parentheses, same below); realized net profit of 4.302 billion yuan (+10.14%); and realized net profit of 4.141 billion yuan (+21.46%) after deduction of non-return to mother. Among them, revenue from innovative drugs reached 10.637 billion yuan (+22.1%, excluding revenue from external licensing), maintaining a high growth rate. Innovative drug revenue accounted for a record high of 46.6%. 2024Q1 achieved revenue of 5.998 billion yuan (+9.20%); realized net profit attributable to mother of 1,369 million yuan (+10.48%); and realized net profit of non-return to mother of 1,440 billion yuan (+18.06%).
The results were in line with our expectations.
Innovative results continue to be realized, driving steady growth in performance: the company has been approved to market 16 Class 1 innovative drugs and 4 Class 2 new drugs, covering various treatment fields such as anti-tumor, analgesic anesthesia, metabolic diseases, and infectious diseases. In 2023, revenue from innovative drugs reached 10.637 billion yuan (+22.1%, excluding revenue from external licensing), accounting for 46.6% of revenue. Innovation-driven steady growth in performance. In addition, major products such as IL17 monoclonal antibodies, PCSK9 monoclonal antibodies, and JAK1 inhibitors are expected to be approved one after another this year. HER2ADC will be declared for sale around the middle of this year, and is expected to be approved next year. As new products are approved and released one after another, the share of innovative drug revenue is expected to continue to increase, becoming an important engine for the company's performance growth.
Overseas licensing and overseas clinical gains continue, and the internationalization process is steadily advancing: in 2023, the company reached 5 foreign licensing deals, including PARP1 inhibitors, Claudin 18.2 ADC, TSLP monoclonal antibodies, etc., with a total transaction amount exceeding 4 billion US dollars. It is expected that many products, including HER3 ADC, will be authorized overseas this year, and the global value of innovative drugs will continue to be realized. The treatment of advanced liver cancer with carrilizumab plus apatinib has been completed and accepted by the FDA. The PDUFA date is May 31. Various ADC products such as HER2 ADC, Claudin 18.2 ADC, TROP2 ADC, HER3ADC, CD79b ADC, and Nectin-4 ADC have achieved simultaneous R&D at home and abroad, and are steadily advancing the internationalization process.
Early R&D capabilities are outstanding, and several innovative technology platforms are expected to continue to produce new products: the company will invest 6.15 billion yuan in R&D in 2023, accounting for 26.95% of revenue, and a steady increase in R&D investment. The company has built a rich technical platform such as PROTAC, molecular glue, ADC, bis/multi-specific antibodies, AI molecular design, and gamma-deltaT, and is expected to continue to launch new products into the clinical stage.
Profit forecast and investment rating: According to the company's innovative drug release situation, we adjusted net profit to mother in 2024-2025 to 53.81 (previous value 54.65) /66.32 (previous value 65.89) billion yuan. The net profit to the mother is estimated to be 8.172 billion yuan in 2026. The current market value corresponds to the 2024-2026 PE of 52/42/34 times. Due to: 1) continuous implementation of innovative results, driving steady growth in performance; 2) continuing promotion of BD and internationalization, which is expected to usher in qualitative changes; 3) the gap has been cleared, and a new stage of growth has been maintained.
Risk warning: the amount of innovative drugs released falls short of expectations; international breakthroughs are difficult; the impact of volume procurement continues