2023 Annual Report and 2024 Quarterly Report

In 2023, the company achieved operating income of 920 million yuan, up 6.15% year on year; net profit of 150 million yuan, up 48.24% year on year; net profit after deducting net income of 127 million yuan, up 42.51% year on year; and basic earnings per share of 0.96 yuan, up 47.69% year on year. In 2024, Q1 achieved operating income of 199 million yuan, up 20.67% year on year; net profit to mother of 0.42 million yuan, up 62.28% year on year; net profit after deduction of 40 million yuan, up 74.63% year on year; basic earnings per share of 0.27 yuan, up 68.75% year on year.

“Su Ling” health insurance negotiations were renewed, and value was further released

In 2023, the company's revenue side and profit side showed a growth trend, mainly due to the company's hemocoagulase preparation “Su Ling” successfully renewed through medical insurance negotiations, and the company took measures to improve drug accessibility, further release the clinical value of “Suling”, and expand the market share of “Suling”. In 2023, “Suling” achieved operating income of 61.34956 million yuan, and sales increased 19.83% year on year; in addition, the company's product “Secret Cover” achieved operating revenue of 29.65785 million yuan, complementing the original business channel and broadening the sales network in 2023. Successfully complete the annual performance promise of no less than 120 million yuan.

Enrich the new drug development pipeline to achieve sustainable development

In terms of the R&D pipeline, the company focuses on segments where clinical needs have not yet been met, such as hemostasis, perioperative period, bone metabolism, cancer, and immunity, where there is a lot of room for R&D innovation and drug use opportunities, while actively exploring other treatment fields. The company's main research projects currently include KC1036, Jincao tablets, and injectable horseradish hemagglutinin for dogs. KC1036, a class 1.1 innovative chemical developed independently by the company, achieves anti-tumor activity by inhibiting multiple targets such as AXL and VEGFR2.

In 2023, the company carried out a phase III clinical study on KC1036 for the treatment of advanced esophageal squamous cell carcinoma and a phase II clinical study for patients with advanced thymic tumors, which are progressing smoothly. The company's product, Jincao tablets, is the only innovative variety of effective traditional Chinese medicine for “chronic pelvic pain as a sequelae of pelvic inflammatory diseases”. On March 22, 2024, the company said that the clinical phase IIIII trial of Jincao tablets in female patients with chronic pelvic pain sequelae of pelvic inflammatory disease showed that the pain loss rate of Jincao tablets reached the end of the main study. Their safety and tolerability were good, and the incidence of adverse events was low. Injectable horseradin for dogs is the company's first product that is expected to enter the pet medicine circuit. With the gradual opening up of the pet surgery market in China, if the product is launched in the future, it is expected to add new performance growth points to the company. Overall, the company's R&D pipelines progressed in an orderly manner, and some projects achieved phased breakthroughs during the year, which is expected to support the company's continued rapid development in the future.

Strengthen strategic cooperation and move from “new China” to “new global”

By facing changes in the pharmaceutical industry, we will embark on a brand new journey from “new in China” to “new in the world”. The company strengthens exchanges and cooperation with R&D institutions and institutes, and has established partnerships with many professional research institutes at home and abroad. The company continues to search for varieties in fields with great market potential or characteristics, accelerate the formation of a pattern of organic connections between marketed products, products to be marketed, products to be marketed, pre-clinical research products, and pre-research products, and enhance the company's sustainable development capabilities.

Investment advice:

We expect the company's diluted EPS in 2024-2026 to be 1.02 yuan, 1.26 yuan, and 1.48 yuan, respectively, with corresponding dynamic price-earnings ratios of 29.18 times, 23.73 times, and 20.12 times, respectively.

As a leading enterprise in the hemocoagulant formulation industry segment in China, Kangchen Pharmaceutical has benefited from the recovery in the number of surgeons in medical institutions. Through continuous R&D innovation and product introduction, various R&D projects are progressing smoothly, and phase III clinical trials of the innovative traditional Chinese medicine Jincao tablets have reached the end of the study. KC1036 is about to enter the clinical phase III clinical stage for advanced esophageal squamous cell carcinoma, and the indications for juvenile Juventus sarcoma have been approved. In the future, the company is expected to usher in diversified implementation of innovative achievements and maintain a purchase rating.

Risk warning: risk of drug development falling short of expectations, risk of policy risk, risk of product sales falling short of expectations