Introduction to this report:
After excluding large orders, the regular business grew steadily, and emerging businesses such as peptides continued to advance, optimistic about long-term growth space, and maintained an increase in holdings rating.
Key points of investment:
Maintain an increase in holdings rating. 2024Q1 revenue of 1,400 million yuan (-37.76%), net profit to mother of 282 million yuan (-55.27%), net profit after deducting non-return to mother was 255 million yuan (-58.88%). The results were in line with expectations. Considering that the new business will continue to be affected by the investment and financing environment, the 2024-2026 EPS forecast was lowered to 3.20/4.09/5.34 yuan (originally 3.78/4.55/5.74 yuan). Considering the average valuation of comparable companies, PE33X was given in 2024, the target price was maintained at 105.84 yuan, and the holding increase rating was maintained.
Regular business grew steadily after excluding large orders. Excluding large orders, the regular business increased 15.21%; the revenue of large multinational pharmaceutical companies was 482 million yuan; excluding large orders, the year-on-year increase was 19.62%; the revenue of small and medium-sized pharmaceutical companies was 918 million yuan, up 13.02% year on year. By business sector: Small molecule business revenue of 1,223 billion yuan, excluding large orders, a year-on-year increase of 26.58%, gross profit margin of 47.34%, confirmed revenue of 148 small-molecule clinical stage projects, 30 commercialization projects, and 41 phase III projects; emerging business revenue of 176 million yuan (-29.32%), with a gross profit margin of 17.30%, mainly affected by the domestic investment and financing environment. Profitability is expected to improve after production capacity climbs.
Emerging businesses continue to advance. The company continues to promote the oligonucleotide CDMO business. By 2023, the solid-phase peptide synthesis production capacity will reach 10,250L, and 2024H1 is expected to reach 14,250L; the CDMO formulation continues to increase customer development efforts, and the number of new orders signed in 2023 increased 50% year-on-year. Biomacromolecules delivered the first dual-antibody ADC project. The first batch of production of synthetic biotechnology's first IND project was successfully delivered. In 2023, the continuous flow technology export business undertook 19 new projects, amounting to more than 250 million yuan. Emerging business segments continue to advance and are expected to continue to help long-term development.
Catalysts: Order progress exceeded expectations, and new businesses such as chemical and biomolecules expanded rapidly.
Risk warning: Industry competition increases risk, geopolitical risk, commercial order fluctuation risk.