Brief performance review
On April 25, 2024, the company released its report for the first quarter of 2024. In the first quarter of 2024, the company achieved operating income of 10.411 billion yuan, an increase of 2.93% year on year; realized net profit to mother of 862 million yuan, an increase of 14.18% year on year; realized net profit to mother after deducting non-recurring profit and loss of 838 million yuan, an increase of 10.66% year on year.
Management analysis
The overall operation of all sectors was steady, and the medical and aesthetic sector maintained a good growth trend. The overall operation of the core subsidiary China and America East China continued to maintain a steady growth trend, achieving operating income (including CSO business) of 3.399 billion yuan, an increase of 10.53% year on year; consolidated net profit of 751 million yuan, an increase of 11.67% year on year. The pharmaceutical business achieved overall revenue of 6.717 billion yuan, a year-on-year decrease of 1.86%, and realized net profit of 107 million yuan, an increase of 1.51% over the previous year. The medical and aesthetic sector achieved a total revenue of 630 million yuan (excluding internal offsets), an increase of 25.30% over the previous year. Its wholly-owned subsidiary of Chinese Medicine and Aesthetics actively expanded the domestic market. During the reporting period, it achieved revenue of 257 million yuan, an increase of 22.65% over the previous year, and an increase of 13.38% over the fourth quarter of 2023. Revenue from the industrial microbiology sector maintained steady growth, up 23.00% year over year.
Research and development work progressed rapidly, reaching a number of important milestones. The company invested 588 million yuan in R&D in the pharmaceutical industry in the first quarter; of this, direct R&D expenditure was 349 million yuan, an increase of 13.96% over the previous year. Injectable Linasip (ARCALYST?) The Chinese marketing license application for recurrent pericarditis indications was accepted in March. The GLP-1R/GIPR dual-target long-acting polypeptide agonist HDM1005 for weight management in overweight or obese people and the Chinese IND application for 2 indications of type 2 diabetes was approved in March, and the first patient enrollment and administration of the Phase Ia clinical study in China was completed. Additionally, the US IND application for HDM1005 for overweight or obesity indications was approved in April. The cellular immunotherapy product Zewokie Orense injection, which has reached exclusive commercialization with Keji Pharmaceutical, received a notice from the Drug Administration and was approved for marketing with conditions. It is used to treat adult patients with recurrent or refractory multiple myeloma. It has progressed after at least 3 lines of treatment (at least one proteasome inhibitor and immunomodulator has been used). The company has formed a dedicated commercialization team, and the first prescription in the country was issued on the day the product was approved for marketing. The company's R&D work is progressing rapidly, and it is expected that it will continue to contribute new performance growth points.
Profit Forecasts, Valuations, and Ratings
We maintain our profit forecast for 2024-2026, and expect the company to achieve net profit of 3.36 billion yuan (+18%), 3.94 billion yuan (+17%), and 4.57 billion yuan (+16%), respectively. In 2024-2026, the company's corresponding EPS was 1.92, 2.25, and 2.61 yuan, respectively, and the corresponding current PE was 16, 13, and 12 times, respectively. Maintain a “buy” rating.
Risk warning
Product development progress falls short of expectations; risk of net interest rate decline due to increased competition in the product market; risk of falling short of expectations in market promotion, etc.