Incidents:
The company released a report for the third quarter of 2022. From January to September 2022, the company's operating performance continued to grow, achieving operating income of 321 million yuan, +22.59% year on year; net profit of the mother was 165 million yuan, +16.03% year on year; net profit of the non-return mother was 157 million yuan, +20.72% year on year.
In a single quarter, the company achieved operating income of 106 million yuan, which is basically the same as the same period last year; Gimu's net profit was 504 million yuan, -12.86% year on year, mainly due to a decrease in non-financial profit and loss; after deducting net profit of non-Gimo's net profit of 61 million yuan, +15.95% year on year, performance was slightly lower than market expectations.
Comment:
After deducting the impact of LNP commercialization orders, the company's performance continued to grow steadily.
In the first three quarters of this year, the company achieved product sales revenue of 269 million yuan, and its order revenue for LNP commercial products outside of China was 25 million yuan; in the first three quarters of last year, the company achieved product sales revenue of 231 million yuan, and its order revenue for LNP commercial products outside of China was 39 million yuan. Therefore, after deducting the impact of foreign LNP commercial orders, the company's product sales revenue was +27.36% year on year, and net profit was +30.04% year on year. After deducting net profit and non-recurring profit and loss from foreign LNP commercial order revenue, net profit was +37.79% year-on-year.
Continue to increase investment in R&D to enhance the company's innovative strength in new PEG fields.
From January to September 2022, the company's R&D expenses were 61 million yuan, +68.97% year on year, and the R&D expenditure rate was 19.13%, +5.25 pp year on year. The company continues to step up the promotion of independent R&D projects for polyethylene glycol irinotecan, JK-2122H, and JK-1119I, and actively lay out other R&D pipelines to continue investing in R&D talents, materials and equipment.
Profit forecast, valuation and rating: Considering the impact of the decline in orders for commercial products of foreign LNP products, we lowered the forecast for the company's net profit of 2022-2024 to 1.99, 2.61, and 344 million yuan respectively (down 16% from previous forecasts), up 13.33%/31.11%/31.76% year-on-year. The corresponding EPS was 3.30/ 4.33/ 5.71 yuan respectively. The current price of PE was 50/ 38/ 29 times, maintaining the “buy” rating.
Risk warning: risk of failure in the development of innovative products; risk of US international trade protection; risk of core technology iteration.