1Q24 Revenue and profit grew steadily, maintaining buy ratings
The company released its quarterly report for the year 24 on April 25. 1Q24 achieved revenue of 10.41 billion yuan (+2.9% yoy), net profit of 860 million yuan (+14.2% yoy), net profit after deducting non-return to mother net profit of 850 million yuan (+10.7% yoy). The main reason for the slowdown in 1Q24 revenue growth was a slight decline in business under the high base of 1Q23 (65% of 1Q24 commercial revenue), but due to limited commercial contribution to profit (1Q24 commercial profit of 107 million yuan, accounting for 12%), profit side still achieved double digit growth . Considering the small impact of collection in 24 years+intensive approval of innovative drugs+ release of liraglutide and medical and aesthetic release at home and abroad, we maintained net profit of 34.25/40.31/4 387 billion yuan in 24-26 years, and the segmented valuation method gave a target price of 50.49 yuan (previous value of 49.67 yuan).
Under pressure from a high commercial base, industrial generic drugs are growing steadily
1) Commerce: 1Q24 revenue of 6.72 billion yuan, -1.9% yoy, mainly due to the high base of 1Q23 (1Q23 pharmaceutical commercial revenue +15.7% yoy vs 23-year pharmaceutical commercial revenue +5.6% yoy), we expect 2Q24 to resume positive growth, 24-year revenue +~ 5% yoy; 2) Industry: 1Q24 revenue of 3.40 billion yuan, +10.5% yoy, net profit to mother of 750 million yuan, 11.7% yoy. Looking ahead to 24 years, although Bailing capsules are no longer an exclusive product (Zolite was approved in 1M24), considering that the difference between the bid price of Bailing tablets collected by the Hubei Proprietary Chinese Medicine Alliance and the medical insurance negotiation price of Bailing capsules is small (0.95 yuan/tablet vs. 1.03 yuan/capsule), we expect the impact of contract renewal to be limited. At the same time, considering the increase in sugar reduction contribution of Liraglutide 3M23 approval, we expect +~ 15% yoy of industrial revenue in 24 years.
Overseas medical and aesthetic pressure is under pressure, and the GLP-1 series pipeline gradually became 1Q24's medical and aesthetic revenue of 630 million yuan (+25.3% yoy), of which: 1) Overseas: 1Q24 revenue of 270 million yuan (-4.4% yoy), mainly due to the slowdown in global macroeconomic growth, we expect revenue +~ 15% yoy for 24 years; 2) Domestic: 1Q24 Xinkeli Aesthetics revenue of 255 million yuan (+22.7% yoy, 13.4% qoq). The implementation of the GLP-1 pipeline (simeglutide clinical phase 3, GLP-1 small molecule weight loss clinical phase 2 & hypoglycemic clinical phase 1, GLP-1/GIP clinical phase 1, GLP-1/GCGR/FGF21R weight loss phase 1 clinical, approved clinical hypoglycemic, severe high triglyceride blood IND) is expected to drive continued high growth in the medical and aesthetic sector.
The marketing application for high-end hyaluronic acid MaiLi Extreme was accepted, and the medical and aesthetic pipeline is in the harvest period. The company has a comprehensive layout in the domestic medical and aesthetic field: 1) Minimally invasive: i) Girls' Acupuncture: Type S was marketed in August '21; Type M has completed the enrollment of all subjects in 3M23. We expect to complete clinical trials and apply for listing in '25; ii) MaiLi Extreme: Class 3 medical device, which has been submitted for listing in 4M24, and we expect to be approved for listing in '25; iii) Botulinum Tox: in collaboration with Chongqing Yan Yu YY001 has completed phase 3 clinical enrollment, and we expect it to be approved for marketing at the end of '25; ATGV-110, a partnership with ATGC in Korea, has submitted a marketing application and was accepted in Korea; 2) Non-invasive: i) Bushue F0: skin whitening, already launched in 1Q22 China; ii) Reaction: radiofrequency anti-aging, already listed in 6M23 China; iii) V20: radiofrequency firming hair removal, which has been accepted in 9M23, and we expect to be approved for marketing within 24 years.
Risk warning: Product sales fall short of expectations, risk of product price reduction, R&D progress falling short of expectations.