1Q24 results are in line with our expectations
The company announced 1Q24 results: revenue of 8.98 billion yuan, +11.5% year-on-year. Net profit attributable to mother and core net profit were RMB 16.1/1.72 billion respectively, +12.9%/11.6% YoY. The first quarter results were in line with our expectations.
The company maintained its double-digit revenue growth guide for the whole year.
Development trends
The rate of neuro+cardiovascular+digestive metabolism is strong. Looking at the changes in revenue by business in 1Q24: nervous system +27%, anti-tumor +12%, anti-infective +10%, cardiovascular +22%, respiratory system -6%, digestive metabolism +60%. The company said that Enbip injections are vigorously expanding the county area; capsules doubled month-on-month in 1Q thanks to the expansion of retail and self-funded markets. The company said that newly marketed varieties and new batch of indicated varieties (including mitoxantrone liposomes, RANKL monoclonal antibodies, irinotecan liposomes, TNK stroke indications, etc.) were successfully admitted and released in the first quarter, and the increase in revenue from the new products was in line with the company's expectations. Management maintains the sales guide for new products contributing 3 billion yuan this year, and expects that with the approval of more new drugs, the contribution of new products is expected to double next year. Furthermore, the company also indicated that the recent margins of the innovative drug hospital entry policy are clearly improving.
We look forward to the continued fulfillment of the R&D pipeline. As of May 2024, various products such as PD-1 monoclonal antibodies, omalizumab, DBPR108, amphotericin B liposomes, and meloxicona crystal injections are in the marketing review stage of the China Drug Administration. The company said that Nectin-4 ADC currently has about 60 people enrolled. Currently, the results are ideal for cervical cancer, urothelial cancer, etc., and may be the focus of promotion in the future. While EGFRADC clinical doses are climbing in China and the US, the company said it will consider testing first-line use in non-small cell lung cancer with three generations of EGFR-TKI in the future; testing indications such as head and neck squamous cell cancer, nasopharyngeal cancer, and lung cancer in combination with PD-1. In addition, the ilitecan liposome and amphotericin B liposome are in the US marketing review stage. The company expects on-site inspection by the US FDA in 2024, and the company said it may adopt an authorized model for sale in the US market in the future.
Profit forecasting and valuation
We keep our profit forecast unchanged. The current stock price corresponds to 11/9 times the 2024/25 price-earnings ratio. We maintain our outperforming industry rating and target price of HK$9.3, corresponding to a price-earnings ratio of 13/11 times in 2024/25, with 35% room to rise from the current stock price.
risks
The competitive landscape has deteriorated, new product promotion falls short of expectations, collection price reductions have exceeded expectations, and internationalization has fallen short of expectations.