Core views

The company issued the documents of the 2023 Annual General Meeting of Shareholders and announced the 2024 financial budget report (bill). The main business goals for 2024 are to achieve revenue of 6.126 billion yuan and net profit to reach 1,791 billion yuan. In 2023, driven by a recovery in demand for diagnosis and treatment, the company's performance grew rapidly, the amount of pulp collected increased significantly, and maintained the advanced level in the country. The company continues to advance the R&D pipeline, and high-concentration hydroxyacetamol and recombinant factor VIII have been approved for listing one after another. The company set business goals for the year, demonstrating its solid confidence in development.

occurrences

The company issued the documents of the 2023 shareholders' meeting and set the 2024 business goals. On May 22, the company issued the documents of the 2023 annual shareholders' meeting and announced the 2024 financial budget report (proposal). The main business targets set by the company for 2024 are to achieve revenue of 6.126 billion yuan and net profit to reach 1,791 billion yuan.

Brief review

Pulp harvesting improvement and R&D innovation have achieved remarkable results. The business goals show development confidence, rapid growth in performance in 2023, and a steady increase in pulp harvesting volume. In 2023, the company's revenue was 5.180 billion yuan, up 21.57% year on year; net profit to mother was 1,110 billion yuan, up 25.99% year on year. The rapid increase in performance is mainly due to the recovery in patients' demand for diagnosis and treatment since 2023 and the restoration of hospital-side diagnosis and treatment order, driving continued strong demand for blood products, compounded by the low performance base for the same period last year. The company is actively promoting the construction of plasma stations and application for operation. Up to now, the total number of single plasma collection stations it owns has reached 102, and there are 80 plasma stations. In 2023, the company's 79 active single plasma collection stations collected 2,415 tons of plasma, an increase of 18.67% over the previous year, and continued to maintain the advanced level in China.

Continue to advance the R&D pipeline, and launch important products one after another. The company continued to promote new product development in 2023: the fourth-generation 10% concentration of isopropyl prepared by Chengdu Rongsheng chromatography process was approved, the first in China; Chengdu Rongsheng obtained marketing approval for injectable recombinant human coagulation factor VIII. Chengdu Rongsheng human fibrinogen and Lanzhou blood prothrombin complex are in the marketing license application stage; Chengdu Rongsheng subcutaneously injecting human immunoglobulin and injectable recombinant human coagulation factor VIIIa are undergoing phase III clinical trials; Chengdu Rongsheng injectable recombinant human coagulation factor VIII-Fc fusion protein and Guizhou blood prothrombin complex have obtained the “Drug Clinical Trial Approval Notice”. On April 30, the company's coagulation factor IX was approved for clinical use. In the future, the products under development will gradually be approved for listing, which will further increase the company's output in tons of slurry and enhance the company's profitability.

Set business goals for 2024 to demonstrate the company's confidence in development. The company determined the 2024 financial budget based on the country's macroeconomic situation, industry trends and market changes, and compared the opportunities and challenges faced. Among them, the main business goals for 2024 were revenue to reach 6.126 billion yuan (up 18.3% year on year), and the net profit is to reach 1,791 billion yuan (up 18.7% year on year). The company's financial budget for the past few years has set its development goals for that year, and the actual completion situation basically matches the established goals; setting annual development goals this time shows the company's solid confidence in development. It is expected that in 2024, the pattern of strong supply and demand in the blood products industry will continue. Combined with the company's new product launch and increased sales and operation capacity, the company is expected to achieve annual revenue and profit targets and continue to develop healthily.

Profit Forecasts and Investment Ratings

As a leading enterprise in the blood products industry, the company is leading in the number of plasma stations and pulp collection in the country. It continued to promote the construction of plasma stations in 2023, and the amount of pulp collected reached a new high.

It is expected that in 2024, the company's pulp collection volume is expected to accelerate as pulping permits are obtained one after another at pulping stations under construction, which is compounded by the pulping climbing slope at the Yingpulping Station. On the demand side, demand for blood products, represented by Jingacrylic, is expected to maintain a strong trend in 24 years, driving the company's product sales growth. High concentrations of isopropyl and recombinant factor VIII have been approved and are expected to contribute new performance increases in 24 years. In addition, the company's production capacity construction continues to improve, and the plasma processing capacity is expected to continue to improve; the R&D pipeline is progressing smoothly, and the output of tons of slurry will continue to increase in the future, helping to further improve profitability.

We expect the company to achieve operating income of 6.163 billion yuan, 7.349 billion yuan and 8.516 billion yuan respectively in 2024-2026, and net profit to mother of 1,336 billion yuan, 1,705 billion yuan and 1,875 billion yuan respectively, up 20.4%, 20.2% and 16.8% year-on-year respectively. EPS is 0.81 yuan, 0.97 yuan, and 1.14 yuan per share. The current stock price corresponds to the 2024-2026 valuation of 35.1X, 29.2X, and 25.0X, respectively, maintaining the purchase rating.

Risk analysis

1. Safety issues of blood products and the risk of monitoring single plasma collection stations. Due to the biological properties of the main raw materials of blood products, based on the current level of science and technology, theoretically there is still a possibility that some unknown pathogens cannot be identified and removed, and the resulting safety issues may adversely affect the company's operations. Continued standardized operation of single plasma collection stations is an important factor in the overall operation of blood products companies. Changes in the regulatory policies of single plasma collection companies may have a certain impact on the company.

2. Risk of underutilization of production capacity due to increased difficulty in plasma collection: The raw material for blood products is healthy human plasma. Due to the special nature of the source, the aging of the domestic population has intensified, the enthusiasm of plasma donors in various regions has yet to be increased, and there is an imbalance between supply and demand, resulting in tight supply in the entire raw plasma industry. As the company's Yong'an plant and Kunming blood products are put into production, production capacity expands, and there is a risk that the increase in raw plasma supply will be less than the increase in production capacity.

3. The progress of development and launch of new products fell short of expectations.