Event: The company released the semi annual performance forecast of 2024. It is estimated that the net profit attributable to the parent company in 2024H1 will be 180~250 million yuan (+330%~497% year-on-year, the same below), and the net profit attributable to the parent company after deducting non profits will be 180~250 million yuan (+319%~481%); It is estimated that in 2024Q2, the net profit attributable to the parent company is expected to be 114~184 million yuan (+443%~776%), and the net profit not attributable to the parent company will be 115~185 million yuan (+475%~825%,+77%~185% month on month).
Peptide API continued to exert its power, and the profit end far exceeded expectations. The company's net profit attributable to the parent company after deducting non profits in 2024H1 has exceeded 168 million yuan in 2023, and this performance has greatly exceeded the market expectation. According to the announcement, the performance growth benefited from the independent selection of products. Considering that the current influenza is not high and oseltamivir is not in peak season, we believe that the profit mainly comes from peptide APIs, especially GLP-1 APIs. If linear extrapolation is carried out based on the mid report performance, we predict that in 2024, the net profit excluding non attributable to the parent company is expected to reach 360~500 million yuan (+114%~198% year-on-year).
GLP-1 series peptides are in short supply and the market continues to boom. The GLP-1 market continues to grow. In 2022, the sales of GLP-1 drugs will reach US $22.5 billion, and rapidly grow to US $37 billion (+64% year-on-year) in 2023. It is expected to reach a new high in 2024. According to JPMorgan Chase, the GLP-1 market size will reach 71 billion dollars in 2032. The huge market potential has stimulated the influx of latecomers. The leading manufacturers, Novo Nordisk and Lilly, have also actively invested in production expansion to ease the pressure on production capacity.
Vigorously promote workshop construction and continue to release polypeptide business capacity. The company's Lianyungang factory has two polypeptide API production workshops, of which the third generation workshop (106 workshop) has been put into production. The single batch output of several long-chain modified polypeptide APIs such as Smeaglutide has exceeded 10 kg, and the total capacity of polypeptide APIs has reached tons.
BD capability determines the upper limit of development. The chairman of the board of directors leads the BD team, enabling the company to develop. In recent years, the company has continued to strengthen the construction of BD team, actively attracted outstanding talents at home and abroad, improved market share through matrix layout, comprehensively covered China, Europe, America and the Asia Pacific market, and continued to develop important customers in Brazil, Greece, Italy and other places.
With polypeptide APIs as the core, the forward-looking layout has won the first mover advantage. By 2023, the company has completed the domestic registration of 16 API varieties and the US FDA registration of 12 API varieties, and the pipeline covers large polypeptide varieties such as Smei, Lila, Tilpoltide, Lanruitide, thymosin, etc. In 2023, SmithKline, Lila and other APIs won the FA letter of FDA successively. When the patent of China Simei expires in 2026, the generic drug customers will shift from the R&D and declaration stage to the commercialization stage, and the market demand will usher in the first big growth point. Enterprises with first mover advantage deserve special attention. With the growth of GLP-1 market, the company's performance is expected to continue to rise, and we continue to focus on it.
Profit forecast: we are optimistic about the continuous expansion of the company's customers, and the independent products will be accelerated with the gradual listing of downstream customers' products. According to the earnings forecast, the net profit attributable to the parent company in 2024-2026 will be 374 million yuan, 539 million yuan and 827 million yuan respectively, 130%, 44% and 54% year on year, and the corresponding PE will be 35 X, 24 X and 16 X respectively, maintaining the "buy" rating.
Risk tip: sales are less than expected, product R&D progress is less than expected, and industry competition intensifies.
