occurrences
The company announced results for the first quarter of 2023 and 2024. Revenue in 2023 was 22.82 billion yuan, up 7.3% year on year, net profit attributable to mother was 4.302 billion yuan, up 10.1% year on year; after deducting non-net profit of 4.141 billion yuan, up 21.5% year on year. Revenue for the first quarter of 2024 was 5.998 billion yuan, up 9.2% year on year, net profit to mother was 1,369 billion yuan, up 10.5% year on year, after deducting non-net profit of 1.44 billion yuan, up 18.1% year on year.
Revenue from innovative drugs is growing rapidly, and it is expected that it will continue to complete the incentive plan assessment target. The equity incentive target will maintain a compound growth rate of 20% + for three years in 2022, 2023, and 2024
Revenue from innovative drugs in 2023 (tax included, not including foreign licensing revenue) was 10.637 billion yuan, an increase of 22.10% over the previous year. The company completed the equity incentive assessment target at a 100% unlock ratio for two consecutive years in 2022/2023. The cumulative equity incentive targets for 2024, 2024-2025, and 2024-2026 correspond to 13 billion yuan, 29.5 billion yuan, and 50.3 billion yuan, respectively, corresponding year-on-year growth rates of 22%, 49%, and 53%, respectively. Innovative drugs are expected to continue to grow rapidly in the next three years.
A number of products are still expected to be approved for marketing in 2024, which will continue to provide growth momentum, including SHR8058, SHR8028, funacizumab (IL-17A), emaxitinib (JAK1 inhibitor), and rikasimab.
Research and development continues to be realized, and both the metabolic field and ADC field are expected to make significant progress in 2024. The company will complete the GLP-1/GIP dual-target drug HRS9531 in phase II clinical trials related to weight loss or sugar reduction in 2023. Depending on the observation period from 20 to 36 weeks, it is expected that the data will be read out and phase III clinical trials will be initiated this year.
SHR-A1811 has received 5 BTD certifications for indications including breast cancer, non-small cell lung cancer, colorectal cancer, and gastric cancer. Currently, SHR-A1811 has 5 phase III clinical trials involving breast cancer (adjuvant, advanced HER2 expression 1L, advanced HER2 expression 2L), 3L colorectal cancer, and 2L gastric cancer.
SHR-A1811 is expected to submit a listing application in 2024.
Profit Forecasts and Investment Ratings
We expect the company's revenue for 2024, 2025, and 2026 to be 25.946 billion yuan, 30.72 billion yuan, and 35.280 billion yuan, respectively; the 2024 net profit will be 5.302 billion yuan. Considering that 2025 R&D expenses and some drugs are still in the early stages of marketing, we will reduce net profit to mother in 2025 from 6.427 billion yuan to 6.0 billion yuan. We expect the company's net profit to be RMB 7.06 billion in 2026.
Maintain a “buy” rating.
Risk warning: R&D progress falls short of expectations, price declines of marketed drugs exceed expectations, risk of commercial competition