Operational quality improved, and 2024Q1 turned loss into profit
The company publishes an annual report for 2023 and a quarterly report for the first quarter of 2024. In 2023, it achieved revenue of 1,259 million yuan, a year-on-year decrease of 4.32%; achieved net profit of 190 million yuan, a year-on-year increase of 110.74%; in the first quarter of 2024, revenue of 361 million yuan, an increase of 11.79% year-on-year, achieved net profit of 12 million yuan, an increase of 241.49% year-on-year. In the first quarter of 2024, a loss was turned into a profit, and the quality of operations improved.
The equity incentive plan sets overseas sales revenue assessment targets. According to the assessment plan, the overseas revenue target for 2024 is 208-277 million yuan, an increase of 50-100% over the previous year; the overseas revenue target for 2025 is 415-692 million yuan, an increase of 100%-150% over the previous year.
The assessment year for this incentive plan is for the two fiscal years 2024-2025, once for each fiscal year. The assessment was based on the company's overseas sales revenue of 138 million yuan in 2023, and assessed the growth rate of the overseas sales revenue in each assessment year compared to the performance base or the cumulative number of overseas registration approvals obtained. If the actual income is greater than the upper limit of the assessment scope, it will be attributed at the rate of 100%; if the actual income is within the scope of the assessment, it will also be attributed at the rate of 100% or 80% according to the number of registration approvals achieved; if the actual income falls below the lower limit of the scope of the assessment, it will also be attributed at the rate of 50% or 0% according to the number of registration approvals achieved. We believe that the assessment rules balance overseas income and registration process, and that the overall rules are reasonable and flexible.
The equity incentive target this time was 147 people, accounting for 14.05% of the company's total number of employees. These include: directors, senior management; key technical (business) personnel; and others that the board of directors deems in need of motivation. Due to the nature of the company's overseas business, incentives include some foreign employees.
Positioning as a platform-based overseas company, it has actively introduced a variety strategy for many years. A total of 13 varieties have been introduced, and it is expected that various products, including albumin paclitaxel, infliximab, and bevacizumab, will be marketed and sold in overseas markets in 2024. Among them, the company's production line has met EU GMP standards, and injectable paclitaxel (albumin binding) products are eligible to enter the EU market.
Since successfully signing the contract to introduce the first variety of albumin paclitaxel in 2021, the company has obtained overseas rights in 13 products, and the platform effect is beginning to show. The company currently has 13 products in the four major fields of oncology, self-immunity, sugar reduction, and nephropathy, which have product group advantages. The company has a variety of varieties for tumor treatment, including albumin paclitaxel, bevacizumab, trastuzumab, neratinib maleate, lenalidomide, and eribulin; as well as adalimumab and infliximab for self-immune disease treatment; sevillam tablets for chronic kidney disease (CKD); and liraglutide for endocrine diabetes.
Profit Forecasts and Investment Ratings
We expect the company's revenue for 2024 to 2026 to be RMB 1,418, 18.41, and RMB 2,283 million; estimated net profit to mother is RMB 0.5, 1.50, and RMB 239 million. Maintain a “buy” rating.
Risk warning: loss of core technical personnel, insufficient supply of materials, R&D failure, industry regulatory risks