Event: On August 17, the company released its 2024 semi-annual report. In the first half of 2024, Novi achieved revenue of 0.972 billion (-27.71%), net profit of 0.137 billion yuan (-48.27%), and net profit of 0.134 billion yuan (-65.87%) after deducting non-return to mother net profit.
Single Q2 revenue was 0.448 billion yuan, a year-on-year decrease of 28.42%. After deducting non-return net profit of 56.31 million yuan, a year-on-year decrease of 73.76%.
Caffeine prices continue to fall, and 2024H1 revenues are under pressure in the short term. The reason for the pressure on 2024H1's performance is that the price of caffeine APIs is expected to continue to decline compared to the same period last year. The unit price in June '24 was $8.50/kg, down about 41% from the peak price in the first half of last year ($14.43 per kg in January '23).
Dushi Biotech merged in 2024 and entered the field of innovative medicines. In January 2024, the relevant share transfer of Jushi Biotech was completed. Through a capital increase to hold Jushi Biotech, the company extended its business chain to the field of bioinnovative drugs and built a biomedical innovation industry platform. Currently, the research pipeline includes ADC, mRNA vaccines, and antibody drugs. In addition to the two mRNA vaccines authorized for emergency use, several other mRNA vaccines are under development, including respiratory syncytial virus (RSV) vaccine, herpes zoster (VZV) vaccine, dengue fever vaccine, etc. The company has now completed the marketing of a new drug. Enranzubizumab was approved for marketing with conditions in June 2024.
In addition, the company has 5 ADCs in clinical research, 1 of which (DP303c injection) has entered a critical clinical stage; 4 others are in clinical development.
The proposed acquisition of Shijiao 100g is expected to further expand the innovation pipeline. On January 23, 2024, the company reviewed and passed bills such as the “Proposal on the Company's Issuance of Shares and Payment of Cash to Purchase Assets and Raise Supporting Funds and Related Transaction Plans”, and agreed that listed companies intend to purchase 100% of the shares of Shiyao Baig held by Vitaminopharmaceutical, Shanghai, and Enbipu Pharmaceutical by issuing shares and paying cash. Shiyao Baike is committed to the development and commercialization of innovative drugs such as long-term brightening drugs and hypoglycemic weight loss drugs. If the subsequent acquisition of Shijiao Baike is successfully implemented, the company's innovation pipeline will be further expanded.
Profit forecast: We have adjusted our profit forecast based on the company's semi-annual performance. The company is expected to achieve net profit of 0.366/0.451/0.579 billion yuan in 2024-2026, or -51.6%/+23.3%/+28.3% YoY. Corresponding PE valuations were 97.3, 78.9, and 61.5 times, respectively. The company is a leading caffeine API company. The price of caffeine is expected to gradually stabilize in the future. As new Jushi Biotech products are gradually launched and sold, the company's profitability is expected to continue to increase and maintain a “buy” rating.
Risk warning: Caffeine prices continue to fall; industry competition intensifies; R&D progress falls short of expectations, etc.