Event: On April 25, 2024, Gloria Ying released its 2024 quarterly report. In Q1 2024, the company achieved operating income of 140 billion yuan, a year-on-year decrease of 37.76%, a year-on-year increase of 15.21% after excluding the impact of large orders; net profit to mother was 282 million yuan, a year-on-year decrease of 55.27%; after deducting non-net profit of 255 million yuan, a year-on-year decrease of 58.88%.
Revenue from the European and American markets is growing rapidly, and we continue to further serve multinational pharmaceutical companies and overseas customers. In 2024, Q1 achieved revenue of 1,400 billion yuan, gross margin of 43.52%, an increase of 5.49 pts month-on-month, and a year-on-year increase of 62.80% after customers from the European and American markets excluded the impact of large orders in the same period of the year. The company continues to accelerate the expansion of overseas business layout, and several key reserve projects have successively entered the production service stage, creating a good foundation for subsequent commercial project supply and large-scale effects. Looking at the customer structure, revenue from large multinational pharmaceutical companies was 482 million yuan. Excluding the impact of large order revenue in the same period last year, the year-on-year increase was 19.62%, and revenue from small and medium-sized pharmaceutical companies was 918 million yuan, an increase of 13.02% over the previous year. Diversified customers all showed a recovery trend.
Small molecule CDMO is growing steadily, and emerging businesses accelerate platform layout and customer promotion. In 2014, Q1's small molecule business achieved revenue of 1,223 billion yuan, an increase of 26.58% year-on-year after excluding the impact of large orders, and the gross margin level was 47.34%, improving gross margin levels through optimized management and cost control; Q1 had 30 commercialized projects and 148 clinical projects, including 41 clinical phase III projects, and reserves of many popular or promising new targets to form sufficient commercial order reserves. The emerging business achieved revenue of 176 million yuan, a year-on-year decrease of 29.30%, mainly due to poor domestic investment and financing stages, with gross margin of 17.30%. Customer inquiries in the fields of small nucleic acids, ADC, and peptides continued to be active. The company is steadily promoting capacity building and capacity expansion for emerging businesses:
1) The chemical macromolecule sector accelerates commercial peptide production capacity construction. It is expected to reach 14,250L solid phase synthesis production capacity by the end of the first half of 2024 to meet customer commercialization needs and continue to strengthen new technology capacity reserves such as liquid phase synthesis; 2) The evaluation of new production capacity construction in the formulation business has been completed, and business lines such as pre-filled injections are being planned, and several oral peptide formulation projects are under development; 3) The biopharmaceutical CDMO sector focuses on the XDC sector. The share of various conjugated drug orders will continue to increase in the future. Commercial production capacity; 4) In terms of continuous reaction technology, in 2023, the company broke through the technical barriers of many high-risk and difficult processes, achieved pilot scale verification of oxidation, nitrification, and hydrogenation projects. It has completed the implementation of full continuous process packages for several kiloton and 10,000 ton projects, continuously increasing its market influence.
Investment advice: Gloria Ying's small-molecule CDMO business and emerging business two-wheel drive will accelerate overseas production capacity layout in the future. We expect the company's revenue in 2024-2026 to be 64.62/78.87/9.604 billion yuan, up -17.4%/22.1%/21.8% year-on-year, and net profit attributable to mother of 11.64/14.66/1,846 billion yuan, respectively. The corresponding PE is 24/19/15 times, respectively, maintaining the “recommended” rating.
Risk warning: downstream demand risk, project operation risk, loss of core technical personnel, risk of policy change, exchange rate risk, etc.