Key points of investment
The company achieved revenue of 5.982 billion yuan for the full year of 2022, an increase of 15.0% over the previous year; realized net profit of 605 million yuan, an increase of 739 million yuan over the loss in 2021; adjusted net profit of 886 million yuan, an increase of 101.8% over the previous year. The gross profit margin was 69.2%, an increase of 3.9 ppt over the previous year; the net profit margin was 9.7%, an increase of 12.5 ppt over the previous year. The sales expenses rate was 30.4%, a decrease of 2.4 ppt over the previous year; the management expenses rate was 9.7%, a decrease of 1.2 ppt over the previous year; the R&D expenses rate was 14.3%, an increase of 1.2 ppt over the previous year; the financial expense ratio was 7.9%, an increase of 0.2 ppt over the previous year. The balance ratio declined to 69.2% from 83.6% in 2021, mainly due to a slight increase in total share capital. In 2022, the company achieved a double increase in profit, and the balance ratio improved.
There has been a steady recovery in mature varieties. By treatment sector, sales revenue of oncology drugs was 1,518 billion yuan, an increase of 43.6% over the previous year. Among them, lipoxine returned to double-digit growth in 2022, renewing the 2022 national health insurance contract with the original standard; sales revenue of cardiovascular system drugs was 1,522 billion yuan, an increase of 11.8% over the previous year. Among them, Xizikang, as an exclusive proprietary Chinese drug, maintained rapid growth in 2022; sales revenue of digestive and metabolic drugs was 632 million yuan, a decrease of 29.6% over the previous year; sales revenue of central nervous system drugs was 1,214 billion yuan, an increase of 3.5% over the previous year. Among them, the negative effects of Sirikang's collection were gradually eliminated, and sales as the original research variety were steady, moderate and positive.
The newly approved products are ready to go. Rexintol was approved by the FDA in January 2023 to treat adult patients with schizophrenia. As the company's first innovative variety approved in the US, it is a landmark. If Xinlin was approved by the NMPA for the treatment of depression in November 2022, it was the first Class 1 chemical drug developed for a local Chinese company with independent intellectual property rights to treat depression. The product did not cause drowsiness and had no obvious effect on sexual function, body weight, and lipid metabolism. Boyoubei was approved by the NMPA for the treatment of osteoporosis in postmenopausal women in November 2022. It is the first biosimilar drug approved in China. Its exclusive marketing rights in mainland China have been granted to Chia Tai Qingdao. Chia Tai Qingdao has been deeply involved in the field of osteoporosis for many years, which can exert greater synergy.
It is expected that new products will continue to be introduced in the future. LY01005, LY03013, LY021702, LY03010 and BA1102 are undergoing NDA reviews in mainland China. LY01017 is undergoing an NDA review in Hong Kong, while LY30990 is undergoing an NDA review in Europe, and LY03005 is undergoing an NDA review in the US.
Additionally, the company has seven products in development that are in preparation for phase III clinical trials, critical studies, or NDA/BLA.
Profit forecast: The company's mature varieties have steadily rebounded, and the innovation pipeline has begun to continue to be implemented. At the same time, the balance ratio is expected to continue to improve. The revenue for 2023-2025 was 64.91/71.888/8.658 billion yuan respectively, and net profit of the mother was 634/9.18/1,439 million yuan respectively. Corresponding to the closing price on April 21, 2023, the price-earnings ratio was 18.71 times, 12.92 times, and 8.25 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: sales fall short of expectations, price reduction exceeds expectations, R&D progress falls short of expectations