occurrences
On March 20, the company released its 2023 annual report. In 2023, the company achieved operating income of 7.816 billion yuan, a year-on-year increase of 13.8%, net profit to mother of 1,549 billion yuan, a year-on-year decrease of 19.1%, and adjusted operating net profit of 1,952 billion yuan, an increase of 17.7% over the previous year. Meanwhile, the Board of Directors of the Company recommended declaring a final dividend of HK$0.25 per share for the year ended December 31, 2023.
reviews
The main business grew steadily in 2023, the net profit from operating income to mother was basically in line with expectations, and the dividend payout ratio increased. The increase in the company's revenue was mainly driven by sales growth in Turbie Australia and Mandy. The decrease in net profit to mother was mainly affected by profit and loss from changes in the fair value of transactional financial assets and profit and loss on exchange. The growth rate of the company's operating net profit to mother was steady, with a CAGR of 10.6% in the past 5 years. The company insists on shareholder feedback and plans to pay a 2023 dividend of HK$0.25 per share, and the corresponding dividend ratio is expected to reach 4.5%.
Gross margin continued to rise throughout '23, and profitability continued to grow. In 2023, the company's gross margin was 85.0%, up 2.4 percentage points year on year; sales expenses ratio was 38.5%, up 0.9 percentage points year on year; management expenses ratio was 6.2%, up 0.5 percentage points year on year; R&D expenses ratio was 10.2%, up 0.1 percentage points year on year; financial expenses ratio was 2.7%, up 1.2 percentage points year on year; and net operating cash flow was 2.08 billion yuan, down 2.8% year on year.
Core product performance is steady, and the biopharmaceutical sector continues to grow. By product, Terbi Australia's revenue was 4.205 billion yuan, up 23.77% year on year; Mandy's revenue was 1,124 million yuan, up 26.16% year on year; dual brand revenue was 940 million yuan, down 16.71% year on year; Yisaipu's revenue was 565 million yuan, up 10.50% year on year; Septin's revenue was 225 million yuan, up 41.80% year on year; CDMO revenue was 174 million yuan, up 4.82% year on year; other revenue was 582 million yuan, down 2.14% year on year.
The research pipeline is progressing in an orderly manner, and the product gradient continues to be rich. In 2023, the company accelerated the research and development process of ongoing research projects, and various products were approved for marketing: Exaipu pre-filled injection forms, nafurafine hydrochloride oral dissolution tablets, Remediol? , minoxidil foam dosage form. The company's free pipeline is about to enter the harvest period, and the anti-IL-17A antibody (608) is expected to be declared and marketed in 2024 for the treatment of plaque psoriasis. At the same time, SSS06 is expected to be marketed in 2024 for the treatment of chronic renal failure anemia.
Investment advice
We expect the company's revenue for 2024-2026 to be 87.44/95.35/10.269 billion yuan, respectively, up 12%/9%/8% year on year, and net profit to mother of 20.13/22.44/2,508 billion yuan, respectively, up 30%/12% year on year, respectively, and corresponding valuation is 6X/6X/5X. Considering the steady growth of the company's main business and the formation of an echelon of products under development, it has gradually entered the cashout stage and maintained a “buy” investment rating.
Risk warning
Product development and launch fell short of expectations; the risk of increased competition; the risk of policy changes in the pharmaceutical industry; the risk of drug price reductions; and product sales fell short of expectations.