新冠相关影响1 季度基本出清。公司表示1 季度收入下滑，主要原因是阿兹夫定等新冠相关产品收入同比大幅下降。剔除新冠和并购的1 季度总收入同比5%，只剔除新冠的总收入同比+11.5%，剔除新冠的新品及次新品收入同比+30%，其中汉曲优、汉斯状、奥康泽等重点品种保持快速放量。1Q24 results are in line with our expectations
The company announced 1Q24 results: revenue of 10.157 billion yuan, -7% YoY; attributed/deducted non-net profit of RMB610/609 million, respectively, or -38%/-34% YoY. The results were in line with our expectations.
Development trends
The impact related to COVID-19 was largely clear in the first quarter. The company said revenue declined in the first quarter, mainly due to a sharp year-on-year decline in revenue from COVID-related products such as azvudine. Excluding COVID-19 and mergers and acquisitions, the total revenue for the first quarter was 5%, excluding only the total revenue of COVID-19 +11.5%, and the revenue of new and sub-new products excluding COVID-19 was +30%. Among them, key varieties such as Hanqu Premium, Hans Shape, and Okanze maintained rapid volume.
The 1Q24 gross profit margin was 50%, up 4.4 ppt month-on-month. The three cost ratios also improved month-on-month, with R&D expenses of 830 million yuan, or -14% year over year. The company said it optimized pipelines with commercial value-oriented assessments, and laid out cutting-edge fields in the industry in the form of funds in addition to traditional R&D cost statistics. The company stated that the reasons for the decline in profits also included the effects of Gland Pharma's merger and amortization of Cenexi's merger and Cenexi's operating losses. The operating cash flow was 917 million yuan, and the +5% innovation pipeline progressed smoothly over the same period last year. 1Q24's self-developed freeze-dried human rabies vaccine (Vero cells), F-i6000 fully automated chemiluminescence immunoassay analyzer, and Ion bronchial navigation operation control system were approved for marketing in China; trastuzumab was approved for marketing in the US, making it the first domestically produced biosimilar approved for marketing in China, the European Union, and the US. The co-developed OP0595 conducted two phase III clinical studies on adult aerobic gram-negative bacterial infections in China; 4 additional adaption applications for adalimumab were accepted by the State Drug Administration; the international multi-center phase III clinical study of desumab reached the main research end; and the Da Vinci SP endoscopic single-hole surgery system entered the National Drug Administration's special review procedure for innovative medical devices. In addition, the company also has a number of innovative molecules approved to conduct clinical trials.
Profit forecasting and valuation
We keep our 2024/25 non-net profit forecast unchanged. The current stock price corresponds to 21/19 times the 2024/25 price-earnings ratio for A shares and 10/8 times the 2024/25 price-earnings ratio for H shares. We maintain our outperforming industry rating, keeping our target price of $34.5 for A shares unchanged, corresponding to a price-earnings ratio of 30/27 times in 2024/25, with 46% upside compared to the current price of A shares; keeping the target price of HK$18.6 for H shares unchanged, corresponding to a price-earnings ratio of 14/12 times for 2024/25, with 48% upside compared to the current price of H shares.
risks
Prices of collection have been reduced beyond expectations, R&D has failed, the competitive landscape has deteriorated, and internationalization has fallen short of expectations.
