occurrences
The company announced 2023 results: in 2023, operating income of 2.124 billion yuan (+114%), adjusted net profit of 26.3% (-0.1pp), adjusted net profit of 412 million yuan (+112%), adjusted net profit of 19.4% (-0.2pp); 2023H2, operating income of 1,130 million yuan (+71%), adjusted net profit of 196 million yuan (+129%), adjusted net profit margin of 17.3% (+4.4pp).
reviews
Revenue has increased significantly at all stages, and the first commercialization project is expected in 2024.
In 2023, IND's pre-stage revenue was 927 million yuan, up +143% year over year, and post-IND revenue was 1,197 million yuan, up +96% year over year.
Revenue is growing rapidly in all regions, with Europe growing the fastest. In 2023, North America's revenue was 852 million yuan, up +91.5% year on year, accounting for 40.1%; China, revenue of 661 million yuan, up +116.0% year on year, accounting for 31.1%; and Europe, revenue of 498 million yuan, up +184.0% year on year, accounting for 23.4%. The company cooperated with six of the top ten global pharmaceutical companies and contributed 24% of revenue in 2023.
The number of projects is growing rapidly. By the end of 2023, the total number of comprehensive projects reached 143, a year-on-year increase of 52.1%. Among them, the total number of pre-clinical and phase I projects increased from 84 at the end of 2022 to 122 at the end of 2023, and the total number of phase II and post-stage projects increased from 10 at the end of 2022 to 21 at the end of 2023. Since its establishment, the cumulative total number of drug discovery projects has increased from 299 at the end of 2022 to 427 at the end of 2023, an increase of 42.8%. The company's pipeline target layout is diverse, including HER3, CLDN18.2, ROR1 and many other targets.
There are plenty of orders in hand, and overseas production capacity is building smoothly. By the end of 2023, the company had on-hand orders of US$579 million, an increase of 82% over the previous year. In 2024, the company expects to complete 5 production process verification (PPQ) projects, and all 5 PPQ projects are arranged at the Wuxi base. Construction of the Singapore plant began in 2024 and is expected to be put into operation in 2026.
Staff is growing rapidly. By the end of 2023, the total number of employees in the company reached 1,178, an increase of 60% over the end of 2022, and the core employee retention rate reached 95.2%.
valuations
We expect Yao Ming Allian's 2024-2026 revenue to be 32.1, 44.6, and 6.05 billion yuan, respectively; net profit to mother will be 4.92 billion yuan, 8.21 billion yuan, and 1,255 billion yuan (the original 2024-25 forecast was 4.92 billion yuan and 851 million yuan), with adjusted net profit of 6.50, 9.90, and 1,350 million yuan, respectively.
We gave Yao Ming Union an adjusted net profit of 50 times PE in 2024 (originally 70x in 2024), based on the HKD/RMB exchange rate of 0.92, corresponding to the reasonable market value of HK$35.326 billion. As of March 26, 2024, the total share capital of the company was 1,198 million shares, corresponding to a reasonable value of HK$29.50 per share (the previous value of the target price was HK$40.47, the main reason for the change was the change in the valuation of comparable companies), maintaining the “superior over market” rating.
risks
Geopolitical risks, increased risk of industry competition, risk of declining R&D expenditure growth rate of pharmaceutical companies, risk that customer pipeline R&D progress falls short of expectations, risk of overseas production capacity construction progress falling short of expectations, risk of company operation quality delivery risk.