Announcement: Boji Pharmaceuticals releases its 2023 Annual Report and 2024 Quarterly Report.
Comment:
The company's performance is growing steadily, and orders are growing rapidly. In 2023, the company's revenue was 556 million yuan, up 31.19% year on year; net profit to mother was 0.24 million yuan, down 12.04% year on year; net profit without return to mother was 10 million yuan, down 24.24% year on year. The company added a new business contract amount of about 1,165 billion yuan, an increase of about 38.12% over the previous year. Among them, the new contract amount for traditional Chinese medicine research and development services was about 372 million yuan, an increase of about 346.86% over the previous year. In the first quarter of 2024, the company's revenue was 167 million yuan, up 62.08% year on year; net profit to mother was 17 million yuan, up 40.67% year on year; net profit after deducting non-return to mother was 0.14 million yuan, up 103.30% year on year.
Operating conditions by business segment in 2023:
(1) Clinical research services: In 2023, the company's clinical research service revenue was 415 million yuan, an increase of 49.58% over the previous year, and an additional clinical research service contract amount of 942 million yuan was added, an increase of 49.25% over the previous year. In 2023, the company will comprehensively enhance its comprehensive competitiveness in the industry, starting with talent strategy, focusing on expansion in the field of indications, testing of innovative drugs and innovative medical technology, international services, expanding the scope of services, strategic institutional cooperation, and information technology construction. Clinical trial service delivery capabilities, commercial bidding capabilities, and internal enterprise management and control capabilities have all been greatly improved.
(i) Pharmaceutical clinical research services: In 2023, the company will serve more than 150 drug clinical research projects at different stages (not including SMO services and testing services) to help customers obtain 5 production approvals and 1 traditional Chinese medicine protection item.
(ii) Medical devices: In 2023, the subsidiary Jiutai Pharmaceutical will provide clinical research services for more than 70 medical devices and more than 50 medical device registration services.
(iii) Institutional cooperation: In 2023, the company cooperated with more than 800 clinical trial service institutions, and signed strategic cooperation agreements with more than 20 clinical trial service institutions, including Loudi Central Hospital and Hebei Medical University Third Hospital, which provided strong support for the development of clinical trial projects.
(iv) Information management: In 2023, the company further improved and upgraded the information-based management system, improved the efficiency of clinical trial project management, sorted out and optimized internal management processes, enhanced the ability to manage refined performance, and strengthened the accumulation of the company's past knowledge.
(2) Pre-clinical research services: In 2023, the company's pre-clinical research service revenue was 78 million yuan, an increase of 6.19% over the previous year, and an additional pre-clinical research service contract amount of 163 million yuan was added, an increase of 13.12% over the previous year. The company's subsidiary Shenzhen Borui added to the “Innovative Drug Discovery and Pharmacy Service” service section and completed initial construction of a “cell biology platform”, including plasmid customization, virus packaging, etc.; a “cell quality testing technology platform” is also being built and improved, and has passed the qualifications of third-party testing agencies CMA and CNAS. The company's chemical research center continues to strengthen the construction of eye drop preparation platforms and inhalation preparation platforms, while the construction of complex injectable formulation platforms is also beginning to bear fruit.
(3) Other consulting services: In 2023, the company's revenue from other consulting services was 49 million yuan, up 19.06% year on year, adding 60 million yuan of other consulting service contracts, a year-on-year decrease of 12.51%, mainly due to changes in the external environment and the slowdown in overseas application of innovative drug companies. In 2023, about 20 domestic and foreign IND licenses were obtained for customers.
(4) CDMO service: The company's CDMO service is carried out by the subsidiary Science Park Company, which has the two major functions of CDMO and business incubator. In 2023, the Science Park Company completed the construction of the third phase of the plant, completed on-site registration and verification of 9 drug varieties, including 4 APIs, 4 tablets and 1 capsule, passed the GMP compliance inspection for bromfenac, and submitted registration data for 3 varieties.
(5) Pre-clinical independent research and technology achievement transformation services: In 2023, pre-clinical independent R&D revenue was 253,700 yuan, and technical achievement transformation services did not generate revenue.
In 2023, the company's self-developed “a method for extracting and purifying highly bioavailable saponin VI” and “a traditional Chinese medicine composition and its application in preparing drugs with the effect of treating pneumonia” obtained invention patent certificates.
The company leverages the enterprise characteristics of a one-stop full-process CRO service to strengthen its core competitiveness. The company will continue to develop clinical research services, and on the basis of maintaining its advantages, expand pre-clinical pharmaceutical research and drug evaluation services, promote technological achievement transformation services; strengthen independent innovation capabilities, steadily develop self-developed varieties; promote customized pharmaceutical contract R&D and production (CDMO) services, and build a one-stop new drug research and development platform. In 2024, in the clinical research service sector, the company will strengthen its traditional Chinese medicine business, innovative drug clinical research service capabilities, and fully participate in market competition; in the pre-clinical research service sector, the company will expand drug evaluation business, especially the evaluation of biopharmaceuticals and cell gene therapy products, and strengthen the construction of traditional Chinese medicine pre-clinical R&D centers and chemical drug R&D centers; in the CDMO service sector, the company will expand its business team, improve its ability to accept orders, and accelerate project registration and application progress. The company will drive clinical business with pre-clinical business; drive CDMO business with clinical and pre-clinical business; and drive CMC, efficacy, safety evaluation, and clinical business with drug discovery.
Profit forecast. We forecast that the company's revenue for 2024-2026 will be 759, 982, and 1.261 billion yuan, respectively, with year-on-year increases of 36.5%, 29.5%, and 28.3%, respectively. The net profit for 2024-2026 will be 0.75, 1.02, and 127 million yuan, respectively, 207.1%, 36.5%, 24.0% year-on-year, and EPS 0.20, 0.27, and 0.33 yuan respectively. Considering that the company is an excellent CRO company, the average PEG value of comparable companies in 2024 is 1.27. We predict that the company's net profit growth rate in 2024 and 2025 is expected to be faster than that of comparable companies. We give it a 50-60 times PE in 2024, corresponding to a reasonable value range of 37.4-4.48 billion yuan, corresponding to a reasonable value range of 9.78-11.74 yuan per share, giving it an excellent rating over the market.
Risk warning. Clinical trial execution risks, increased industry competition risks, management risks brought about by the expansion of business scale, and risks of declining biomedical investment and financing growth.