Incident: The company released a report for the first quarter of 2023. During the reporting period, the company achieved revenue of 2,778 million yuan, a year-on-year decrease of 6.63%; achieved net profit of 857 million yuan, a decrease of 24.71% over the previous year; and achieved net profit of 854 million yuan after deducting non-return to the mother, a year-on-year decrease of 23.93%.
Jinsai Pharmaceutical: Q1 performance was affected by factors such as the high performance base for the same period last year, and good growth is expected to resume in the future. During the reporting period, the subsidiary Jinsai Pharmaceutical achieved revenue of 2,353 million yuan, a year-on-year decrease of 11.14%; realized net profit of 895 million yuan, a year-on-year decrease of 25.73%. According to the company's investor relations activity record sheet, the main reason for the decline in both revenue and net profit was the high performance base due to the emergency release of more than six billion products in March 2022 due to special circumstances and the inability to properly pay for sales expenses and R&D expenses during the same period. Furthermore, January 2023 was still somewhat affected by the epidemic. At present, the relevant influencing factors have been completely eliminated, and it has gradually returned to normal. The enrollment of new patients in April maintained a good growth rate, and it is expected that future performance will resume good growth.
100g Bio: Two factors drive revenue growth, and shingles is expected to increase performance.
During the reporting period, the subsidiary Baig Biotech achieved revenue of 179 million yuan, an increase of 29.71% over the previous year; realized net profit of 18 million yuan, an increase of 5.88% over the previous year. A strong recovery in Q23 revenue was achieved as a result of the low base combined with the increase in chickenpox vaccine sales due to the pandemic in the same period in 2022. On April 10, 2023, 100g Biotech announced that the shingles vaccine obtained the NMPA “Biological Product Batch Issuance Certificate”. In terms of batch approval, the company expects the shingles vaccine to be shipped in May and marketed in large quantities from the end of May to the beginning of June. As the first domestically produced shingles vaccine, shingles is expected to increase the performance of 100 grams of biology.
Investment in R&D has been growing steadily, entering fields such as weight loss and medical aesthetics. During the reporting period, the company's R&D expenses were 335 million yuan, an increase of 42.81%. Higher R&D investment has accelerated the R&D progress of many products under development. Among them, long-acting growth hormone will soon be declared for phase 3 clinical trials in the US, which is expected to be completed in 2025; kintuximab is expected to become the only second-line gastric cancer drug in the world after two years; kinnanumab is progressing smoothly and is expected to become the drug of choice for gout arthritis. Furthermore, the company plans to develop a diversified layout while adhering to the development of the basic growth hormone market. In the field of weight loss, it is expected that weight loss drugs such as gastric occupancy will be launched this year; in the medical and aesthetic field, the focus will be on new drug research and development in the field of skin health, combining hyaluronic acid, collagen and other products with unique competitive barriers. In addition, Jin Funing's application in wound healing and reduction of pigmentation after laser surgery will also be strengthened; in the fields of adult endocrinology, anesthesia, sports medicine, etc., the company will also further expand the company's product coverage and improve the company's pipeline layout in various fields.
Investment advice: We expect the company's revenue growth rates from 2023 to 2025 to 19.0%, 23.6%, and 20.0% respectively, net profit growth rates of 20.6%, 24.7%, and 21.5% respectively. The corresponding EPS will be 12.30 yuan, 15.25 yuan, and 18.48 yuan respectively, and the corresponding PE will be 13.7 times, 11.0 times, and 9.1 times respectively; maintain the investment rating of Buy-A.
Risk warning: risk of increased competition in the growth hormone market, risk of growth hormone collection, risk of clinical trial progress falling short of expectations, risk of clinical trial failure, risk of uncertain impact of the epidemic.