Incident: On April 29, 2024, Yao Ming Kangde released its 2024 quarterly report. The company's Q1 achieved revenue of 7.98 billion yuan, a year-on-year decrease of 11.0%, excluding the post-COVID-19 growth rate of -1.8%; net profit to mother of 1.94 billion yuan, a decrease of 10.4% year on year; adjusted net profit of 1.91 billion yuan, down 18.3% year on year.
The peptide and small nucleic acid business is rapidly expanding, and security assessment and SMO are still growing steadily. (1) WuxiChemistry's revenue was 5.56 billion yuan (-13.5%), and the growth rate after excluding COVID-19 commercialization projects was -0.6%.
Among them, R revenue was 1.56 billion yuan, and D&M revenue was 4.0 billion yuan, a 1.2% year-on-year increase after COVID-19 was excluded. 11 commercialized and clinical phase III programs were added in Q1. The company's TIDES business continued to expand. Q1 revenue reached 780 million yuan, up 43.1% year on year, and on-hand orders increased 110%; the total volume of peptide solid phase synthesis reactors has increased to 32,000 L, fully meeting customers' commercial peptide production needs. (2) WuXi Testing's revenue was 1.49 billion yuan (+2.6%), including laboratory analysis and testing revenue of 1.05 billion yuan (-0.6%), safety assessment business revenue increased by 3.7%, Q1 GLP qualification facilities added a total of 22,000 square meters; clinical CRO and SMO revenue was 440 million yuan (+11.0%). SMO increased 26.4% year-on-year and maintained a leading position in China, continuing to increase its share in treatment fields such as lung cancer, dermatology, and cardiovascular medicine.
The ATU platform commercialization project is gradually being approved, and domestic demand for DDSU is still under pressure in the short term. (1) WuxiBiology's revenue was 550 million yuan (-2.8%), and revenue from new molecular types increased by 12.2% year on year, accounting for 29.2%; in March '24, the Suzhou Guoxiang Intelligent Research Platform was officially put into operation to strengthen the company's new capabilities in vitro biology and pharmacological pharmacology. (2) WuXi ATU has revenue of 280 million yuan (-13.6%). The company is preparing a BLA for the production of a commercial CAR-T LVV. It has now completed PPQ and is expected to file the FDA with 24H2; at the same time, it is preparing a BLA declaration for the production of a commercial CAR-T. It is expected that 24H2 will complete work verification and report to the FDA. (3) WuXi DDSU's revenue was 80 million yuan (-51.8%), domestic demand declined sharply year on year, and the number of newly signed projects declined.
The European and American markets continued to grow, keeping the original year-round guidelines unchanged. The company's US revenue in the first quarter was 4.90 billion yuan, up 0.4% after excluding COVID-19 commercialization projects, and 1.07 billion yuan in Europe, up 3.9% year on year. It continued to expand overseas markets against the backdrop of uncertainty in the external environment. The company kept its 2024 revenue target unchanged, with a year-on-year increase of 2.7%-8.6% after excluding the COVID-19 program. The adjusted non-IFRS net interest rate will remain the same as in 2023.
Investment advice: Pharmacom Kangde is the world's leading integrated, end-to-end CXO leader, empowering new drug research and development projects for domestic and foreign customers through CRDMO and CTDMO business models. We expect the company's net profit to be 94.56/106.07/12.049 billion yuan in 2024-2026, respectively, corresponding PE is 14/12/11 times, maintaining the “recommended” rating.
Risk warning: risk of declining demand, risk of policy change, risk of increased competition, risk of overseas regulation, exchange rate risk, etc.