occurrences
On April 28, 2024, the company released its 2023 annual report. In 2023, the company achieved operating income of 1,263 million yuan (YoY +25.24%), net profit of 289 million yuan (YoY +37.19%), deducting non-net profit of 261 million yuan (YoY +26.38%);
At the same time, the 2024 quarterly report was released. In Q1 2024, the company achieved operating income of 336 million yuan (YoY +11.08%), net profit of 82 million yuan (YoY +79.14%), after deducting non-net profit of 82 million yuan (YoY +87.43%).
viewpoints
The Q1 performance exceeded expectations, and net profit to mother increased significantly. On a quarterly basis, Q4 2023 achieved revenue of 340 million yuan (YoY +42.19%), net profit to mother of 57 million yuan (YoY +132.13%), and deducted non-net profit of 67 million yuan (YoY +175.92%). In Q1 2024, we achieved revenue of 336 million yuan (YoY +11.08%), net profit of 82 million yuan (YoY +79.14%), and net profit of 82 million yuan (YoY +87.43%). Both revenue and profit reached record highs for the same period. The gross margin was 53.68%, +8.12pct year over year, and -2.99pct month-on-month. We believe the main reason for the increase in profitability was: ① didoxone progestogen tablets 2023 It was approved for listing at the end of June, raising the overall gross margin and net margin level. The gross margin of the product reached 87.74% in 2023; ② The gross margin of high-margin products such as abiraterone acetate and eplerenone continued. The gross margins of anti-tumor and cardiovascular products in 2023 were 43.33% (+12.24pct) and 65.30% (+1.13pct) respectively; ③ Interest income boosted the company's performance. The company's interest income in Q1 2024 was 782.09, an increase of 6.6577 million yuan over the previous year.
The dodroprogesterone tablets were successfully admitted to the hospital, and the product was quickly dosed. By business, in 2023, the APIs and intermediates business achieved sales revenue of 1,059 million yuan (YoY +16.06%), accounting for 84.44%, gross margin of 56.74%, of which anti-tumor products achieved revenue of 244 million yuan, +73.63% year-on-year, cardiovascular products achieved revenue of 300 million yuan, +26.94% year-on-year; the formulation business achieved sales revenue of 90 million yuan, accounting for 7.17%, and gross margin of 87.74%. The company's didroprogesterone tablets were approved for sale at the end of June 2023. It is the company's first formulation product. The company has a formulation sales team of nearly 20 people, responsible for product marketing. By the end of 2023, it had connected to the Internet in 24 provinces and cities and admitted 1,058 hospitals (including community outpatient clinics). As the products continue to enter hospitals, the formulation business is expected to accelerate volume.
Expand the field of peptides and oligonucleotide drugs and open up the growth ceiling. The peptide drug market has broad prospects, and the global market size is expected to reach US$96 billion by 2025. The global oligonucleotide drug market is expected to grow rapidly, with a compound annual growth rate of 32.2% between 2020 and 2025. In the field of peptides, in March 2022, the company plans to invest 279 million yuan to build a 300KG simeglutide API production line and supporting facilities. It is expected to be officially put into operation in June-July 2024, and simeglutide APIs are expected to be sold in large quantities. In the field of oligonucleotides, in July 2021, the company established Shanghai Orient Biotech to focus on oligonucleotide drug research and development. At present, the company's peptide and small nucleic acid business has established regional strategic partnerships with multiple customers.
Investment advice
The release of the company's didroprogesterone tablets and simeglutide APIs is expected to accelerate within 1-2 years. It is predicted that the company's 2024/25/26 revenue will be 16.43/20.70/2,559 billion yuan, and net profit to mother will be 4,00/5.20/676 million yuan, corresponding to the current PE of 25/19/15X, and will continue to be given a “buy” rating.
Risk warning
Policy risk; risk of increased market competition; risk of exchange rate fluctuations; risk of product development failure.