Core views:
Promote the development of small-molecule CDMO and promote the rebalance of the company's overall profitability. According to the company's quarterly report, the company achieved total revenue of 1,400 billion yuan, a year-on-year decrease of 37.76%, and a year-on-year increase of 15.21% after excluding the impact of large order revenue in the same period last year. Among them, customers from the European and American markets increased 62.80% year-on-year after excluding the impact of large order revenue in the same period of the previous year, and the overall business gross profit margin was 43.52%, an increase of 5.49 percentage points over the previous quarter. Revenue from major multinational pharmaceutical companies was RMB 482 million, up 19.62% year on year after excluding the impact of large order revenue in the same period last year, and revenue from small and medium-sized pharmaceutical companies was RMB 918 million, up 13.02% year on year.
The small molecule business revenue was RMB 1,223 billion, up 26.58% year on year after excluding the impact of large order revenue in the same period last year, and the gross profit margin of the small molecule business was 47.34%, including 30 small molecule commercialization projects, 148 small molecule clinical-stage projects, and 41 clinical phase III projects with confirmed revenue. The emerging business achieved revenue of RMB 176 million, a year-on-year decrease of 29.30% and a gross profit margin of 17.30% due to the continuing impact of the domestic investment and financing environment.
The buyback shows confidence and waits for the industry to warm up. According to the company's quarterly report announcement, the company held its second extraordinary shareholders' meeting in 2024 on February 29, 2024 to review and pass the “Proposal on the Company's Share Repurchase Plan”. According to the share repurchase plan, the company will use centralized bidding transactions to repurchase A shares from the secondary market. The total capital to repurchase shares will not be less than RMB 600 million (inclusive), and not exceed RMB 1.2 billion (inclusive); the repurchase price will not exceed 157 yuan/share.
Profit forecasting and investment advice. Based on the company's orders and production capacity, the company's net profit for 24-26 is estimated to be 1,299/16.00/2,040 billion yuan respectively, EPS is 3.52/4.33/5.52 yuan/share, respectively, and the corresponding PE is 23.03/18.70/14.67 times, respectively. Refer to comparable companies in the industry, keep the reasonable value of the company's A shares unchanged at 87.91 yuan/share, and maintain a “buy” rating. In terms of H shares, the reasonable value of the company's H shares remained unchanged at HK$69.12 per share, maintaining a “buy” rating.
Risk warning. Order completion falls short of expectations, a slowdown in the number of new projects, geopolitical risks, etc.