The results for the first three quarters of 2023 are in line with our expectations
The company announced its results for the first three quarters of 2023: revenue was 2.585 billion yuan, down 5.69% from the same period last year; net profit from home was 286 million yuan, down 13.47% from the same period last year; and net profit from non-return was 251 million yuan, down 22.14% from the same period last year.
Trend of development
The core products of the nuclear drugs business maintained steady growth. In the first three quarters of 2023, the company's income from FDG injection reached 316 million yuan, an increase of 7.85% over the same period last year; that of technetium-labeled drugs reached 78.45 million yuan, up 21.7% over the same period last year; and that of Yunke injection reached 192 million yuan, an increase of 14.29% over the same period last year, mainly due to the restoration of diagnosis and treatment order in hospital departments. We believe that the expansion of the company's high-margin nuclear drug business is expected to increase the company's gross profit margin.
The decline in traditional business is mainly due to lower prices. In the first three quarters of 2023, the company's revenue from APIs reached 1.347 billion yuan, down 17.36% from the same period last year, mainly due to the return of global heparin sodium API prices and demand to normal. In the first three quarters of 2023, the company's key preparation product, nadroparin calcium for injection, achieved an income of 153 million yuan, a decrease of 48.14% over the same period last year, mainly due to the national collection price reduction of nadroparin calcium injection.
The research and development of innovative diagnostic nuclear drugs is progressing smoothly. As of September 30, 2023, the company announced that Fluoro [18F] Siritide injection (LNC1001) has entered the clinical phase of Ⅲ, and Fluoro [18F] fibrstatin injection (LNC1005) has completed the clinical summary report of Phase Ⅰ. In addition, the company's Alzheimer's disease diagnostic drug APN-1607 is promoting phase Ⅲ clinical inclusion in an orderly manner, and we believe that the company's innovative diagnostic nuclear drugs are expected to be the first to enter the harvest period.
Other: in the first three quarters of 2023, the company's gross profit margin was 43.8%, up 1.7% from the same period last year; the sales expense rate was 15.7%, up 0.7% from the same period last year; the management expense rate was 7.2%, up 1.2% from the same period last year; and the R & D expenditure rate was 4.8%, up 1.2% from the same period last year.
Profit forecast and valuation
Taking into account the impact of the decline in the price of traditional business, we lowered the 2023 Universe net profit forecast for 2024 by 10.8% to 361 million yuan / 433 million yuan, an increase of 17.4% and 20.1% respectively over the same period last year. The current share price corresponds to a price-to-earnings ratio of 40.8 times 2024 / 34.0 times 2024. Considering the upward move of the valuation center of the nuclear drugs sector, we maintain the industry rating and target price of 18.6 yuan, corresponding to 42.5 times 2024 / 35.4 times earnings, respectively, which is 4.1% higher than the current stock price.
Risk
The export sales of APIs are lower than expected, the volume of diagnosis and treatment of nuclear medicine is not as expected, and the progress of research and development is not as expected.