The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved operating income of 140 billion yuan, a year-on-year decrease of 37.76%, and net profit to mother of 282 million yuan, a year-on-year decrease of 55.27%, after deducting non-net profit of 254 million yuan, a year-on-year decrease of 58.88%.
The level of gross profit increased month-on-month, and the small-molecule business continued to develop rapidly. The company achieved revenue of 1,400 billion yuan, a year-on-year increase of 15.21% after excluding the impact of large order revenue in the same period last year. Among them, customers from the European and American markets increased 62.80% year-on-year after excluding the impact of large order revenue in the same period of the previous year, and the overall gross profit margin of the business was 43.52%, up 5.49 pcts from the previous quarter, and overseas customers continued to be active. Revenue from major multinational pharmaceutical companies was 482 million yuan, up 19.62% year on year after excluding the impact of large order revenue in the same period last year, and revenue from small and medium-sized pharmaceutical companies was 918 million yuan, up 13.02% year on year. The small molecule business revenue was 1,223 billion yuan, up 26.58% year on year after excluding the impact of large order revenue in the same period last year, and the gross profit margin of the small molecule business was 47.34%. Among them, there were 30 small molecule commercialization projects with confirmed revenue and 148 small molecule clinical-stage projects with confirmed revenue, including 41 clinical phase III projects. The emerging business achieved revenue of 176 million yuan, a year-on-year decrease of 29.30% and a gross profit margin of 17.30% due to the continued impact of the domestic investment and financing environment.
Looking at various expense ratios, the company's 24Q1 expense ratio fluctuated, achieving a net sales margin of 19.97%, a year-on-year decrease of 7.95pcts; a year-on-year sales expense ratio of 3.19%, an increase of 1.69pcts; and a management expense ratio of 12.33%, an increase of 4.96octs year-on-year.
Active buybacks show confidence in long-term development. On February 29, 2024, the company reviewed and passed the “Proposal on the Company's Share Repurchase Plan”. According to the share repurchase plan, the company will use centralized bidding transactions to repurchase shares from the secondary market. The total capital for the repurchase of shares will not be less than RMB 60 million (inclusive), and no more than RMB 120,000 million (inclusive); the repurchase price will not exceed 157 yuan/share. The share repurchase will be used to subsequently implement employee stock ownership plans or share incentives and cancellation to reduce registered capital.
Looking forward to 2024: The company will accelerate overseas production capacity layout, promote the rebalance of profitability, accelerate the development of emerging businesses, increase the construction of R&D platforms, and iteratively upgrade the operation management system, laying a good foundation for the future.
Profit forecast and rating: We expect the company's net profit to be 1,244 billion yuan, 1,533 billion yuan, and 1,904 billion yuan respectively, up -45.2%, 23.2%, and 24.2% year-on-year; corresponding PE is 25X, 20X, and 16X times, respectively, maintaining a “buy” rating.
Risk warning: The industry's growth rate falls short of expectations, and there is a risk that demand for pharmaceutical R&D will decline.