The results for the first quarter of 2024 are in line with our expectations
The company announced 1Q2024 results: the company's revenue was 591 million yuan, down 11.12% year on year, net profit to mother was 215 million yuan, down 14.28% year on year, and net profit after deducting non-return to mother was 215 million yuan, up 13.01% year on year, in line with our expectations.
Development trends
1Q2024 revenue fell 11.12%, mainly due to the company's regulation of insulin delivery pace in the first quarter.
1Q24 gross margin was 78.7%, up 1.1 percentage points year on year; sales expenses ratio was 29.7%, up 3.3 percentage points year on year; management expense ratio was 7.0%, up 0.8 percentage points year on year; R&D expenses rate was 4.7%, up 0.5 percentage points year on year.
The company's full line of insulin products was successfully renewed with Class A to be selected for national insulin collection. According to the company's announcement, on April 23, the company participated in the insulin collection work of the National Joint Procurement Office. The selection results of this procurement cycle were implemented until December 31, 2027. All of the company's insulin products were selected from Class A, among which insulin glargine, insulin 30 injection, and insulin 50 injection were selected from category A1. According to the company's announcement, the company's selected products had annual sales of 2,558 billion yuan in 2023. We believe in the cost advantages brought by the company's large-scale production capacity, and we expect that this collection will continue to increase the market share of the company's products.
Clinical trials of innovative drugs in the field of metabolic diseases are progressing steadily. The company announced that as of April 2024, the company's GLP-1/GIP dual-target receptor agonist (THDBH120 for injection) has been clinically approved for weight loss, and diabetes indications have entered the phase Ia clinical phase Ia research stage; the phase I clinical trial of the gout dual-target inhibitor XO/URAT1 (THDBH151 tablets) has completed a summary report. Furthermore, the company expects the international registration of the company's products to increase further in 2024.
Profit forecasting and valuation
We maintain the company's 2024/2025 net profit forecast of 1,299 billion yuan/1,494 million yuan unchanged. We keep the company's outperforming industry rating and target price of 14.36 yuan unchanged, corresponding to a price-earnings ratio of 21.9 times/19.1 times in 2024/2025. The current stock price corresponds to a price-earnings ratio of 15.4 times/13.4 times in 2024/2025, with 42.3% upside from the target price.
risks
Product release falls short of expectations, and R&D falls short of expectations.