Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 3.276 billion yuan (-8.58%), net profit to mother of 210 million yuan (-31.75%), and net profit after deducting non-return to mother of 212 million yuan (-26.72%). In the first quarter of 2024, the company achieved operating income of 647 million yuan (-23.90%), net profit attributable to shareholders of listed companies was 64.33 million yuan (+28.38%), and net profit attributable to shareholders of listed companies after deduction was 54.85 million yuan (+29.40%).
Multiple negative factors, such as asset impairment, affected the 2023 performance, and the layout of the nuclide drug supply network was becoming more and more perfect. The decline in the company's performance in 2023 was mainly due to: (1) downstream heparin formulation companies entered the inventory removal stage, and the inventory price of heparin sodium was reduced to prepare 112 million yuan for the 2023 price drop; (2) the API business declined. In 2023, the company's API business revenue was 1,678 billion yuan (-18.61%), gross margin was 26.10% (+2.02pct), and heparin sodium sales fell 11.79%; (3) pharmaceutical product revenue of 400 million yuan (-17.20%), mainly due to narcox Heparin calcium injection won the bid for the 8th batch of centralized procurement of national drugs in March 2023, and the sales price dropped. In the first quarter of 2024, the company's API business revenue was 289 million yuan (-29.94%), mainly due to a drop in the price of heparin products. We believe that prices and sales are expected to gradually stabilize as the heparin API removal cycle comes to an end. The nuclear drug business sold well, with total revenue of 1,017 billion yuan (+11.20%) in 2023, of which key product 18F-FDG generated revenue of 420 million yuan (+12.00%); Yunke injection revenue was 244 million yuan (+19.52%). In 2023, the company continued to rapidly advance the construction of nuclear pharmacies. It has built and put into operation more than 30 nuclear pharmacies, basically completed the national nuclear drug network layout, and is in a leading position in the industry in the production capacity layout of short-half-life nuclide drugs.
Research and development of innovative nuclear drugs is progressing steadily and is about to enter a cashout period. At present, the company has several new nuclear drug varieties in different stages of development. Among them, 99mTc-labeled tetriphosate and sodium fluoride injections have been submitted for marketing. Fluorine [18F] sireotide injections, fluorine [18F] afapeptide injections, APN-1607 and rhenium [188Re] etidronate injections are in clinical phase III, and several products are in the pre-clinical stage. The company's nuclear drug products will receive intensive approval in the next 2-3 years. It is expected that after the launch of related products, rapid release will be achieved through mature supply network layouts.
Profit forecasting and valuation. We expect the company's revenue from 2024 to 2026 to be 3.291 billion yuan, 3.616 billion yuan, and 4.09 billion yuan, respectively, with year-on-year growth rates of 0.5%, 9.9% and 10.9%, respectively; net profit to mother will be 305 million yuan, 364 million yuan, and 436 million yuan respectively. Based on the closing price on May 6, the corresponding PE will be 38.0 times, 31.9 times and 26.6 times, respectively, maintaining the “buy” rating.
Risk warning: Competition in the stock nuclide drug industry has intensified; the approval progress and release rate of new nuclear drug varieties is lower than expected, research and development has failed; the API business boom is low.