1H24 results are in line with our expectations

The company announced 1H24 results: revenue of 0.402 billion yuan, a year-on-year increase of 27.85%; net loss to mother of 0.237 billion yuan, corresponding to a net loss of 0.57 yuan per share, after deducting a net loss of 0.27 billion yuan from non-return to mother, which is in line with our expectations.

Development trends

Domestic biosimilar sales have been growing steadily, and overseas commercialization has begun. According to the company's announcement, the company's domestic sales of Geleri and Pberg increased steadily in the first half of the year. In May 2024, the company officially commercialized its tocilizumab biosimilar drugs in the US, and began contributing overseas sales revenue in the first half of the year. We look forward to the continued fulfillment of the company's biosimilars overseas.

1H24 has achieved several overseas licensing milestones, and 2H24 may bring more revenue recognition. Company announcement 1H24:1) The company granted STADA for exclusive rights in BAT2506 (golimumab) in some European countries. The total amount of down payment and milestone payment was as high as $0.1575 billion. Of these, the company received an initial payment of 10 million US dollars on June 28. 2) The company granted Macter an exclusive interest in BAT1706 (bevacizumab) in the Pakistan and Afghanistan markets. 3) The company granted SteinCares for exclusive rights in BAT2506 (golimumab) and BAT2606 (mepolizumab) in the Brazilian and Latin American markets. Furthermore, the company previously licensed the exclusive US interest in BAT2206 (usinumab) to Hikma. The company announced that BAT2206's European and US listing applications were accepted on July 19, and the company received a milestone payment of 10 million dollars on July 24. We expect 2H24 may be expected to confirm additional authorized milestones in revenue and increase performance.

Pipeline review and clinical research and development continue to advance. On June 28, the company announced that the self-developed first-class antithrombotic drug betanin (BAT2094, bevibatide citrate injection) was approved for marketing in China. On July 25, the company announced that BAT3306 (pabolizumab biosimilar) completed the first international phase I/III clinical trial enrollment.

Profit forecasting and valuation

Considering the increasing uncertainty of the long-term competitive pattern in the overseas biosimilar market, we lowered the company's 2024/2025 revenue forecast by 4.2%/9.1% to 1.025 billion yuan/1.289 billion yuan, and the EPS forecast to -0.66 yuan/-0.35 yuan (previously -0.64 yuan/-0.34 yuan). Considering the company's position as a pioneer in domestic biosimilar products going overseas, we have maintained an outperforming industry rating. According to the DCF valuation, the target price was lowered by 24.7% to 25.0 yuan, and the current stock price has room for an upward trend of 26.5%.

risks

Risk of R&D failure, risk of domestic and foreign review and commercialization falling short of expectations, exchange risk.