Matters:

Bide Pharmaceuticals released its 2023 Annual Report and 2024 Quarterly Report. In 2023, the company achieved revenue of 1,092 billion yuan, a year-on-year increase of 30.94%, net profit of 110 million yuan, a year-on-year decrease of 24.94%, after deducting non-net profit of 123 million yuan, a year-on-year decrease of 10.57%. In the first quarter of 2024, the company achieved revenue of 263 million yuan, a year-on-year increase of 4.05%, and net profit to mother of 0.26 million yuan, a year-on-year decrease of 29.39%, after deducting non-net profit of 0.25 million yuan, a year-on-year decrease of 34.74%.

Commentary:

Overseas revenue continues to grow at a high rate, and the share of overseas revenue continues to rise. In 2023, the company achieved revenue of 1,092 billion yuan (+30.94%). By business line, the pharmaceutical molecular block business revenue was 945 million yuan (+28.60%), and the scientific reagent business revenue was 146 million yuan (+48.46%). By region, domestic revenue in 2023 was $535 million (+24.87%), accounting for 49%, and overseas revenue of 557 million yuan (+37.36%), which increased to 51%.

In the first quarter of 2024, overseas revenue was 148 million yuan, which further increased to 56%.

The company's gross margin gradually stabilized. Through strategic analysis, the company closely followed market trends and made price policy adjustments to reduce product sales prices to basically the same level as the market and industry. 2023Q2 gross margin declined sequentially, and subsequent gross margin remained stable.

The results of the company's refined management are gradually showing. In 2023, the company renovated and expanded its regional centers in Germany and India, further consolidating its core advantage of “more, faster, better, and cheaper”, and plans to intelligently lay out US warehouses. In terms of sales, the company actively participated in academic conferences and exhibitions at home and abroad, and its brand influence continued to increase. In terms of research and development, the company has increased the layout of novel drug molecular blocks and core product lines. By the end of 2023, the company had more than 112,000 kinds of products in stock (102,400 kinds of pharmaceutical molecular blocks and 0.96 thousand types of scientific reagents), which can provide end customers with more than 400,000 kinds of pharmaceutical molecular blocks with novel structures and diverse functions. Sales expenses, administrative expenses, and R&D expenses combined increased 47% in 2023. The company actively carried out refined management, with remarkable results. The 2024Q1 sales expense ratio and management expense ratio improved markedly from month to month, and various operating indicators achieved a positive trend.

Investment advice: In view of the intensification of market competition and the company's previous price policy adjustments, the net profit forecast for 2024-2026 is expected to be 1.42, 1.90, and 255 million yuan (previously forecast values were 2.95 million yuan and 407 million yuan), respectively, up 29.5%, 33.8%, and 34.6% year-on-year, while EPS was 1.56, 2.09, and 2.81 yuan, respectively. According to the Comparable Company Valuation Law, in view of the company's continuous strengthening of its “more, faster, better, and more economical” core competitiveness and continuing to increase its global market layout, it is given 35 times PE over 24 years, with a target market value of 5 billion yuan and a target price of about 55 yuan. At the same time, referring to the cash flow discount valuation method, the conclusions are cross-verified through absolute valuation, and the “recommendation” is maintained.

Risk warning: 1. Industry demand weakens; 2. Market competition intensifies; 3. Overseas market expansion falls short of expectations.