Event: On April 17, 2023, the company released the first quarter report of 2023. 2023Q1 achieved total operating revenue of 2,778 million yuan, a year-on-year decrease of 6.63%; net profit of Gimu was 857 million yuan, a decrease of 24.71% over the previous year; net profit of non-Gwimo was 854 million yuan, a year-on-year decrease of 23.93%.
Kinsai Pharmaceutical's growth hormone is under pressure in the short term and is expected to gradually recover and maintain steady growth. The core subsidiary Jinsai Pharmaceutical achieved revenue of 2,353 million (-11.14%) in 23Q1, net profit of 895 million (-25.73%), and a net interest rate of 38.04% (-2.47pp). The restrictions on the movement of people due to the deregulation of epidemic control were still obvious in early January. The company only began to resume growth hormone terminal sales after the Spring Festival, compounded by last year's high delivery base, which led to short-term revenue pressure. As the recovery improves, sales models are gradually adapted, and new patients gradually recover, growth hormone is expected to continue to grow rapidly throughout the year. In the future, with development in the fields of pediatrics, obstetrics and gynecology, oncology, etc., Jinsai Pharmaceutical is expected to maintain steady growth over the long term.
The recovery of 100 grams of the chickenpox vaccine was evident. The 23Q1 subsidiary Baig Biotech achieved revenue of 179 million (+29.71%), net profit of 18 million (+5.88%), and a net interest rate of 10.06% (-2.26pp). Benefiting from the deregulation of epidemic control and personnel movements, 23Q1's chickenpox vaccine sales increased significantly, and revenue growth was relatively good. Due to the low price of chickenpox vaccine exported overseas, the increase in overseas sales led to a decline in the gross margin of the chickenpox vaccine, and profit growth was slower than revenue growth. The subsidiary Huakang Pharmaceutical achieved revenue of 165 million (-2.94%) and net profit of 0.09 million (0%). The subsidiary Gaoxin Real Estate achieved revenue of 71 million (-58.48%) and net profit of 0.1 million (-95.24%). The company plans to transfer 100% of its shares in Hi-Tech Real Estate to Chaoda Group, the controlling shareholder of the company, to continue to develop its main business and further focus on biopharmaceuticals.
The cost rate has remained stable, and R&D investment has continued to rise. 23Q1 The company's sales expenses were 841 million yuan (-11.12%), the sales rate was 30.28% (-1.53 pp); management expenses were 187 million yuan (+8.10%), the management fee rate was 6.73% (+0.92pp); and the financial rate was -1.30% (-0.78pp). In addition, R&D expenses were 335 million yuan (+42.81%), the R&D fee rate was 12.06% (+4.17pp), and R&D investment continued to grow at a high rate.
Profit forecast and investment advice: Considering the pressure on the company's short-term performance, with reference to equity incentives, we adjusted the company's revenue for 2023-2025 to 149.176,205 billion yuan respectively (the value before adjustment was 157,191, 23.2 billion yuan), up 17.86%, 17.98%, and 16.56%; the net profit of the mother was 47.88, 55.38, 63.81 yuan (before adjustment was 52.86, 65.81 billion yuan, 8.112 billion yuan), an increase of 15.64%, 15.66% over the previous year. 15.24% The company is a leader in the growth hormone industry. In the context of the procurement implementation of the Guangdong Alliance, it is still benefiting from the industry's boom, and is expected to continue to grow rapidly in 2023 and maintain its “buy” rating.
Risk warning: the risk of increased competition for growth hormone, the risk that the progress of the research pipeline is lower than expected, and the risk of drug tenders being reduced.