The company achieved operating income of 10.411 billion yuan (+2.93%) in 2024Q1 and realized net profit of 862 million yuan (+14.18%) to mother. The company's pharmaceutical industry has reached important milestones. The medical and aesthetic business is growing steadily, and the registration and implementation of key medical and aesthetic products in China continues to advance. Maintain a buy rating.
Key points to support ratings
The profit side maintained steady growth, and the core subsidiaries in China, the US and East China maintained a steady growth trend. In 2024Q1, the company achieved operating income of 10.411 billion yuan, a year-on-year increase of 2.93%, achieved net profit of 862 million yuan, an increase of 14.18% over the previous year, and realized net profit without deduction of 838 million yuan, an increase of 10.66% over the previous year. The core subsidiary Zhongmei Huadong achieved operating revenue (including CSO business) of 3.399 billion yuan in 2024Q1, an increase of 10.53% over the previous year, and consolidated net profit of 751 million yuan, an increase of 11.67% over the previous year. The company's pharmaceutical commercial business achieved operating income of 6.717 billion yuan in 2024Q1, a year-on-year decrease of 1.86%, and realized net profit of 107 million yuan, an increase of 1.51% year-on-year, mainly affected by the high base for the first quarter of 2023.
Continuing investment in R&D, multiple pipelines have reached important milestones. The company's 2024Q1 R&D investment in the pharmaceutical industry (excluding equity investment) was 588 million yuan, of which direct R&D expenditure was 349 million yuan, an increase of 13.96% over the previous year.
The company's innovative drug and biosimilar business reached important milestones: the company's Chinese marketing license application for Arcalyst recurrent pericarditis indications introduced by Kiniksa in the US was accepted in March 2024; the company's self-developed GLP-1R/GIPR dual-target long-acting polypeptide agonist HDM1005 is used for weight management in overweight or obese people, and the Chinese IND application for 2 indications of type 2 diabetes was approved in March 2024, and China Ia completed in March 2024 The first patient was enrolled and administered in a phase clinical study. The US IND application for HDM1005 for overweight or obesity indications was approved in April 2024; the company's first self-developed ADC project, HDM2005, which is intended to be developed to treat advanced solid tumors and hematomas. The Chinese IND application was submitted for acceptance in March 2024; in March 2024, the company's US partner announced the ADC drug ELAHERE for the treatment of platinum-resistant ovarian cancer? In the US, there has been a shift from expedited approval to full approval.
The medical and aesthetic business has maintained steady growth, and the implementation of key domestic medical and aesthetic products continues to advance. The medical and aesthetic sector achieved a total revenue of 630 million yuan (excluding internal offsets), an increase of 25.30% over the previous year. The wholly-owned subsidiary UK Sinclair 2024Q1 achieved consolidated revenue of about RMB 272 million, a year-on-year decrease of 4.40%. Global demand for medical and aesthetic medicine fluctuated due to the slowdown in macroeconomic growth. The company's domestic wholly-owned subsidiary Hinkley Aesthetics achieved operating revenue of 257 million yuan in 2024Q1, an increase of 22.65% over the previous year, and an increase of 13.38% over the fourth quarter of 2023.
The clinical trial of the company's new high-end sodium hyaluronate filler containing lidocaine, MaiLi Extreme in China successfully reached the main research endpoints and showed good product safety data. The registration application for the three types of medical devices in China was recently accepted.
valuations
We maintain our previous profit forecast. The company's net profit for 2024, 2025, and 2026 is expected to be 3.447 billion yuan, 4.113 billion yuan, and 4.975 billion yuan respectively, corresponding EPS of 1.96 yuan, 2.34 yuan, and 2.84 yuan, respectively. The price-earnings ratio is 16.7 times, 14.0 times, and 11.6 times, respectively, based on the closing price of April 29, 2024. Maintain a buy rating.
The main risks faced by ratings
Product development falls short of expectations; exchange rate fluctuations; risk of sales falling short of expectations; risk of price reduction in health insurance negotiations, etc.