Event: The company released its report for the third quarter of 2023. 23Q1-Q3 achieved revenue of 9.655 billion yuan (+1.76% yoy), net profit of 1,602 billion yuan (+6.29% yoy), and net profit of 1,576 billion yuan (+4.41% yoy) after deducting non-return net profit of 1,576 billion yuan (+4.41% yoy). 23Q3 achieved revenue of 2,965 billion yuan (-6.93% yoy), net profit of 467 million yuan (-4.55% yoy), and net profit of 482 million yuan (+4.18% yoy) after deducting non-return net profit of 482 million yuan (+4.18% yoy).
By business segment: 23Q1-Q3 chemical products achieved revenue of 5.153 billion yuan (-4.71% yoy): of which digestive tract products achieved revenue of 2,279 billion yuan (-12.93% yoy), prostatic hormone products achieved revenue of 2.188 billion yuan (+4.94% yoy), psychotropic products achieved revenue of 4300 million yuan (+7.60% yoy), and anti-infective products achieved revenue of 243 million yuan (-18.57% yoy); APIs and intermediates achieved revenue of 2,587 billion yuan (+3.55% yoy); traditional Chinese medicine formulations Achieved revenue of 1,247 million yuan (+50.17% year-on-year); biological products achieved revenue of 113 million yuan (-31.09% yoy); and diagnostic reagents and equipment achieved revenue of 468 million yuan (-6.88% year-on-year).
Financial indicators: 23Q1-Q3 gross profit margin 63.93% (y-y-1.58pct), net profit margin 16.82% (y-o-y +0.38pct), sales expense ratio 29.15% (y-1.44pct), management expense ratio 5.04% (y--0.81 pct), R&D expense ratio 10.21% (y-0.11pct), financial expense ratio -2.24% (y-y +0.44pct).
Focus on innovative drugs and complex formulations with high barriers, and continue to expand the layout of innovative pharmaceutical products. The company's triptorelin acetate microspheres (1 month delayed release) has been approved; the marketing application for aripiprazole microspheres (1 month delayed release) was accepted in September 2023; follow-up products include octreotide acetate microspheres (1 month delayed release), leuprorelin acetate microspheres (3 months delayed release), etc. The company's IL-17A/F monoclonal antibody has initiated a head-to-head clinical phase 3 of cuqiyumab, and the enrollment of simetaglutide biosimilar drugs has been completed. The company continues to accelerate the introduction of new projects, introducing a thrombin inhibitor in July and a PDE4D allosteric regulator in October.
Profit forecast and valuation: We adjusted the company's profit forecast. The company's 2023-2025 EPS is expected to be 2.21, 2.54, and 2.94 yuan respectively, corresponding to the closing price of November 02, 2023. PE valuations are 15.7, 13.7, and 11.8 times, respectively, maintaining the “increased holding” rating.
Risk warning: industry policy changes, new drug development progress falls short of expectations, and increased market competition