Main points of investment
Q3 performance fluctuated slightly. In the first three quarters of 2023, the company achieved operating income of 9.655 billion yuan, an increase of 1.76% over the same period last year, a net profit of 1.602 billion yuan, an increase of 6.29% over the same period last year, and a non-net profit of 1.576 billion yuan, an increase of 4.41% over the same period last year.
Of this total, Q3 achieved operating income of 2.965 billion yuan in a single quarter, down 6.93% from the same period last year, and its net profit was 467 million yuan, down 4.55% from the same period last year. Affected by the pharmaceutical industry policy, hospital product sales, the company's Q3 single-quarter performance declined in a short period of time.
The profitability has improved steadily and the expenses have been well controlled during the period. In the first three quarters of 2023, the company's sales gross profit margin was 63.93%, down 1.58pct from the same period last year; the net sales profit margin was 16.82%, up 0.38pct from the same period last year; the company's sales expense rate, management expense rate, financial expense rate and R & D expense rate were 29.15%, 5.04%,-2.24% and 10.21%, respectively, compared with the same period last year-1.44pct,-0.80pct,-0.44pct,-0.11pct. The overall cost control ability of the company is good, and the profitability has improved steadily.
The preparation plate slows down for a short time, and the raw material medicine plate grows steadily. In the first three quarters of 2023, the income of the chemical preparation sector reached 5.153 billion yuan (- 4.71%), accounting for 53.37% of the total income. From a sub-field point of view, 1) the digestive tract achieved an income of 2.279 billion yuan (- 12.93%), and the decline in income was mainly affected by factors such as the collection of alprazole tablets and pharmaceutical industry policies. We expect that with the approval of new indications for alprazole and the steady increase in hospital coverage and sales, the alprazole series will continue to grow well in the future. 2) the gonadotropin field has achieved an income of 2.188 billion yuan (+ 4.94%). With the continuous release of leuprorelin microspheres and the launch of new indications of triptorelin microspheres (1 month sustained release), the gonadotropin field is expected to continue to grow. 3) the income in the mental field was 430 million yuan (+ 7.60%). During the reporting period, aripiprazole microspheres for injection (1 month sustained release) were accepted, PDE4 inhibitors were introduced, and mental products were further enriched. During the reporting period, the income of the traditional Chinese medicine preparation sector reached 1.247 billion yuan, an increase of 50.17% over the same period last year. Due to the large base in the same period last year, the growth rate declined (Q3 year-on-year-13.81%). In the future, with the further development of hospitals at the grass-roots level and above, the traditional Chinese medicine sector is expected to maintain good growth. During the reporting period, the API and intermediate sector achieved an income of 2.587 billion yuan (+ 3.55%), and a series of antibiotics and high-end pet drugs achieved good growth.
With continuous investment in R & D, a number of projects under research are progressing steadily. In the first three quarters of 2023, the company spent 986 million yuan (+ 0.72%) on research and development of pipelines. The application of triptorelin microspheres (1 month sustained release) for endometriosis was accepted; the application for aripiprazole injection (1 month sustained release) was accepted; the phase III clinical trial of simiguelutide injection was completed; the recombinant anti-human IL-17A/F humanized monoclonal antibody psoriasis was administered in phase III; and the recombinant human follicle stimulating hormone was used in phase Ⅲ clinical trials. Becton Dickinson & Co introduced phosphodiesterase 4 (PDE4) inhibitors and HHT120 thrombin inhibitors to expand the company's product line.
Investment advice: we temporarily maintain the forecast that the net profit attributable to the parent company from 2023 to 2025 will be 2.268 billion yuan, 2.641 billion yuan and 3.025 billion yuan respectively, corresponding to EPS 2.42,2.82 yuan and 3.23 yuan respectively, and the current stock price will be 14.34 PE 12.31 shock 10.75 times, maintaining the "buy" rating.
Risk hints: drug price reduction risk; R & D progress less than expected risk; market competition risk.