Pegbin's continued expansion led to a rapid increase in the company's revenue. Tebao Biotech is a biotechnology company focusing on the R&D, production and sale of long-term recombinant protein drugs. Currently, it has 5 marketed recombinant protein products, including terzine, telcon, terli, and pezin to treat diseases related to hematologic tumors, and Pegbin for chronic viral hepatitis. In 2023, the company achieved revenue of 210 billion yuan (+37.6%). The main reason for the sharp year-on-year increase in performance is the continued expansion of the company's core product Pegbin. In 2023, Pegbin's revenue was 1.79 billion yuan (+54.2%), which already accounted for 85% of the company's total revenue.
Continued expansion in revenue scale led to rapid cost-side dilution, compounded by a one-time increase in gross margin, making profit growth higher than revenue growth. In 2023, the company's net profit to mother was 555 million yuan (+93.5%), after deducting non-net profit of 579 million yuan (+73.6%). The gross margin reached 93.3% (+4.4pct), mainly because the company's cooperation with Jiankai Technology has expired, and the company no longer pays related patent fees. The sales expense ratio is 40.4% (-5.6pct). We think it is mainly due to the dilution effect brought about by the increase in revenue scale. The management cost rate is 10.0% (+1.0pct), and the R&D expense ratio is 11.0% (+1.1pct), which is basically stable. Thanks to the above factors, the company's net profit margin reached 26.5% (+7.6pct) in 2023. We believe that in the future, with the further dilution of sales expenses, the company's net interest rate still has room for continuous improvement.
The clinical treatment space for chronic hepatitis B continues to expand, and I am optimistic that Pegbin will continue to be released in the future. Pegobin is the only long-acting interferon drug marketed in China. Currently, it is mainly used to treat chronic hepatitis B patients (dominant patients) with HBsAg <1500 IU/ml after treatment with first-line nucleotide analogs. The number of patients in this group is currently about 1.5 to 2.5 million. According to our estimates, the cumulative number of dominant patients covered by Pegbin since its launch is no more than 150,000, and the penetration rate is only 6-10%. We have noticed the recent gradual implementation of the two logics of expanding space for hepatitis B treatment and increasing penetration. Thanks to top-down policies and industry benefits, we believe that hepatitis B diagnosis and treatment from central hospitals to the primary level is expected to accelerate, while the dosage of Pegobin as a first-line hepatitis B medication is expected to accelerate. In January 2024, the first edition of the “Expert Consensus on the Management of Viral Hepatitis B in the Whole Population (2023)” drafted by Academician Li Lanjuan was released; in March, the first edition of the Expert Consensus on the Prevention and Treatment of Chronic Hepatitis B in Children was released; at the end of 2023, the “Standardized Construction and Capacity Enhancement Project for Hepatitis B Clinical Treatment Outpatient Clinics” led by the Health and Health Commission was launched.
Other long-lasting recombinant protein products have entered the harvest period, driving the second growth curve. The company's long-acting brighteners, growth hormone, and erythropotropin are progressing smoothly. Peijin, a long-term G-CSF product, was approved for marketing and included in medical insurance on June 30, 2023. This product was sold by Fosun Pharmaceutical agents, with revenue of 1.06 million yuan in half a year.
The marketing application for long-acting growth hormone was submitted and accepted on January 11, 2024. Long-acting erythropotropin has completed phase II clinical trials and is ready to begin phase III.
Profit forecast: We expect the company to achieve net profit of 7.51/10.51/1,438 billion yuan in 2024-2026, respectively, and the corresponding EPS of 1.85/2.58/3.53 yuan, respectively. Referring to comparable companies, we gave the company 1.3 times PEG, corresponding to 48 times PE in 2024, corresponding to a target price of 89.20 yuan. For the first time, coverage was given, and “superior to the market” rating.
Risk warning: risk of sales of main products falling short of expectations, risk of drugs failing to win the bid and falling prices, risk of new products falling short of expectations