Matters:

The company released its 2022 annual report, achieving annual revenue of 146 million yuan, an increase of 373.10% over the previous year; Guimu's net profit was 846 million yuan. The company's performance was in line with expectations. 2022 Profit Distribution Plan: No dividends.

Ping An's point of view:

The number of Benodar prescriptions is growing rapidly, and commercial value continues to be realized. In 2022, Benoda generated a total of 165 prescriptions, completed the return of 141 patients, and achieved revenue of 146 million yuan, an increase of 373% over the previous year.

In terms of health insurance integration, Benoda has been included in 56 commercial insurance products and 75 welfare insurance coverage. Among patients who completed resettlement in 2022, 24% received insurance compensation, cost insurance coverage ranged from 38% to 100%, and payment bottlenecks continued to break through.

The production side maintained excellent operating performance, and gross margin improved markedly. The company's production success rate in 2022 was 98%, maintaining a 100% delivery ratio. A new capacity expansion plan was approved to better meet growing clinical demand. The company's gross margin reached 40.3% in 2022, an increase of 21 percentage points over 2021. The company previously proposed a three-stage cost reduction strategy. We believe that the increase in gross margin in 2022 was mainly due to the implementation of short-term cost reduction plans, and along with the implementation of medium- to long-term cost reduction measures such as domestic substitution of raw materials and simplification/replacement/merger of production unit operations, there is still plenty of room for improvement in the company's gross margin.

Build a sound and differentiated cell therapy pipeline and continue to expand towards self-elimination and solid tumors. In 2022, the company spent 408 million yuan on R&D, and continued to promote various R&D companies. Benoda has made significant progress in hematoma. Among them, third-line FL was approved, pALL IND and second-line LBCL IND were approved, pALL registered clinical trials and first-line LBCL IIT clinical trials were initiated. It is expected that third-line MCL will submit an NDA by the end of 2023. At the same time, the clinical initiation of phase 1 of the Benodal system for lupus erythematosus indications was initiated. In terms of solid tumors, phase 1 clinical trials of JWATM204 and JWATM214 hepatocellular carcinoma have been initiated. At the same time, strategic alliances have been established with 2seventy Bio, BMS, etc. to promote various solid tumor indications.

The company is a domestic cell therapy leader and maintains a “recommended” rating. Benoda maintained a rapid release in 2022. With the approval of 3-tier FL and various clinical developments, I am optimistic that the company's commercial value will continue to be realized. Considering the impact of the 2022 pandemic on new hospital development, we adjusted the 2023-2024 revenue forecast to 356 million and 704 million yuan (the original forecast was 469 million yuan, 783 million yuan), and added the revenue forecast for 2025, which is estimated to be 1,077 million yuan in 2025.

Considering the continued increase in profitability, we adjusted our net profit forecast for 2023-204 to -626 million yuan, -582 million yuan (the original forecast was -761 million yuan, -496 million yuan), and added the net profit forecast for 2025. The estimated net profit for 2025 is -450 million yuan, maintaining the “recommended” rating.

Risk warning: 1) Risk of R&D failure: There is a possibility that progress will fall short of expectations or even fail. 2) Risk that sales fall short of expectations: The company's sales ability still needs to be continuously verified. 3) Increased risk of competition: Competition may increase due to competition from new entrants.