occurrences
The company issued an announcement for 2023, with revenue of 4,068 billion yuan, up 6.03% year on year; net profit due to mother - 551 million yuan, up 388.19% year on year; net profit not attributable to mother - 533 million yuan, up 689.66% year on year.
The sharp decline on the profit side was mainly affected by the impairment of intangible assets of 887 million yuan. Performance was in line with expectations, taking into account asset impairment. The company issued an announcement for the first quarter of 2024, with revenue of 1,326 billion yuan, up 41.3% year on year; net profit to mother was 146 million yuan, up 125.6% year on year; net profit after deducting non-return to mother was 110 million yuan, up 83.9% year on year.
Pharmaceutical products are growing rapidly. The growth rate is expected to increase as products are released and new key varieties are launched and sold
The company's revenue returned to positive growth in 2023, and we believe revenue growth is expected to accelerate in 2024. The growth rate of the company's own pharmaceutical products is relatively fast. Starting with revenue from its own products in 2023, it has led to a return to positive overall revenue growth. According to the trend in the first quarter of 2024, we believe the growth rate is expected to increase in 2024.
By product in 2023, our own products are growing faster. Revenue from pharmaceutical-owned products was 2.43 billion yuan, up 19.7% year on year; revenue from other pharmaceutical products was 550 million yuan, down 19.5% year on year; revenue from raw materials was 80 billion yuan, up 1.6% year on year, which was basically the same.
The increase in revenue in the first quarter of 2024 was mainly due to an increase in sales of the company's newly introduced pharmaceutical products, a sharp increase in sales of its own pharmaceutical products, and an increase in sales of new self-developed pharmaceutical products.
At the same time, the variety continued to expand, and the domestic drug research and development pipeline continued to advance, and 9 products were sold, including vincristine sulfate injection, dingan crosslinked sodium vitrate injection (general domestic distribution), noradrenaline hydrochloride injection, dopamine hydrochloride injection, concentrated tirofiban hydrochloride injection, concentrated solution for injection of tirofiban hydrochloride, and clofarabine injection. We believe that new and old varieties are expected to improve the sustainability of performance growth.
The large single product, Yilishu, ushered in its first year of health insurance release. We believe it is expected to bring increased performance. At the end of 2023, Eilishu (F-627) was successfully included in the health insurance catalogue through negotiations, and 2024 ushered in the first year of health insurance coverage. Based on Fc fusion protein technology, F-627 is significantly safer than second-generation whitening agents, and has obvious window advantages. It can be used 24 hours after chemotherapy, effectively alleviating patient pain and hospital bed turnover efficiency. Furthermore, the F-627 has been approved for listing in many parts of China, the US, and Europe, and is internationally competitive.
We believe that the innovative variety F-652 is expected to enter registered clinical trials this year, targeting the indications of slow and acute liver failure where there are no drugs available
F-652 is a recombinant human interleukin 22 (IL-22) Fc-fusion protein, and its treatment of slow acute liver failure (ACLF) completed a phase II (dose exploratory study) clinical trial study in China. Statistics and analysis results showed that F-652 had good safety and PK/PD characteristics in patients with hepatitis B concomitant with ACLF, and also showed a trend that F-652 can produce more significant or more important clinical efficacy than existing treatments, reaching the expected goals.
F-652 has previously completed a phase IIa clinical trial for the treatment of severe alcoholic hepatitis (AH) and a phase IIa clinical trial for acute graft-versus-host disease conducted in the US, both of which have achieved positive clinical results. Globally, no IL-22 drugs have been approved for marketing, and F-652 has FIC potential.
Profit Forecasts and Investment Ratings
We expect the company's 2024-2026 revenue to be $56.61, 69.77, and 7.751 billion yuan. Considering the significant increase in the company's profit in the first quarter of 2024, we raised net profit to mother in 2024 and 2025 from 446 million yuan and 658 million yuan to 532 and 755 million yuan. We expect the company's net profit to be 923 million yuan in 2026. Maintain a “buy” rating.
Risk warning: Sales volume falls short of expectations, R&D progress falls short of expectations, risk of policy changes