研究报告Research Report 8 Apr 2025 石药集团 CSPC Pharmaceutical Group (1093 HK) 2024年业绩：成药收入受集采影响承压；授权收入有望贡献增量 FY24 results: finished drug sales under pressure due to VBP; licensing income to contribute incremental revenue [Table_yemei 观点聚焦 1] Investment Focus [Table_Info] 维持优于大市 Maintain OUTPERFORM 评级 优于大市OUTPERFORM 现价 HK$4.89 目标价 HK$5.97 HTI ESG 3.0-2.5-3.5 E-S-G: 0-5, (Please refer to the Appendix for ESG comments) 市值 HK$56.45bn / US$7.27bn 日交易额 (3个月均值) US$62.12mn 发行股票数目 11,544mn 自由流通股 (%) 68% 1年股价最高最低值 HK$7.12- ...

研究报告Research Report 8 Apr 2025 石药集团 CSPC Pharmaceutical Group (1093 HK) 2024年业绩：成药收入受集采影响承压；授权收入有望贡献增量 FY24 results: finished drug sales under pressure due to VBP; licensing income to contribute incremental revenue [Table_yemei 观点聚焦 1] Investment Focus [Table_Info] 维持优于大市 Maintain OUTPERFORM 评级 优于大市OUTPERFORM 现价 HK$4.89 目标价 HK$5.97 HTI ESG 3.0-2.5-3.5 E-S-G: 0-5, (Please refer to the Appendix for ESG comments) 市值 HK$56.45bn / US$7.27bn 日交易额 (3个月均值) US$62.12mn 发行股票数目 11,544mn 自由流通股 (%) 68% 1年股价最高最低值 HK$7.12- ...

Summary of CSPC Pharmaceutical Group Ltd Conference Call Company Overview - **Company**: CSPC Pharmaceutical Group Ltd - **Ticker**: 1093.HK - **Industry**: Pharmaceuticals and Biotechnology Key Financial Results - **FY24 Revenue**: Declined by 8% YoY to CNY 29,009 million, in line with profit warnings [1][8] - **FY24 EPS**: Decreased by 25% YoY to CNY 0.37, also in line with profit warnings [1][8] - **Q4 Revenue**: Declined by 17% YoY, worse than expectations [1] - **Net Profit**: Decreased by 26% YoY to CNY 4,339 million [1][8] - **Operating Profit Margin**: Declined by approximately 4% from FY23 [1] Sales Performance - **Finished Drugs**: Revenue decreased by 7% YoY to CNY 23,736 million [10] - **Bulk Products**: Stagnant with a slight decline of 2% YoY [10] - **Functional Foods**: Experienced a significant decline of 22% YoY [10] - **Major Drug Impact**: Four major drugs, accounting for over 40% of FY23 revenue, faced significant price cuts due to VBP inclusion/exclusion [5] Future Outlook - **Growth Guidance for 2025**: Management anticipates overall growth, driven by new products like Mingfule (TNK) expected to contribute CNY 1.5 billion in incremental sales [1][2] - **Pipeline Expansion**: Over 20 products expected to launch by 2027, including biosimilars and generics [2] - **Early Stage Pipeline**: Management highlighted promising early-stage assets and plans for 3-4 out-licensing deals per year [2] Market Performance - **Current Price Target**: HKD 5.00, with a Market-Perform rating maintained [20] - **Stock Performance**: Year-to-date performance shows a 5.6% increase, but a 29.9% decline over the past 12 months [3][21] Risks and Challenges - **Downside Risks**: Potential losses in upcoming VBP bids and delays in regulatory approvals for new molecules [26] - **Competitive Environment**: Concerns regarding the late entry of innovative assets into a competitive market [2] Additional Insights - **R&D Expenses**: Increased by 7% YoY to CNY 5,191 million, indicating continued investment in innovation despite financial challenges [8] - **Collaboration Deals**: Recent collaborations with BeiGene and Radiance Bio for drug development, with significant potential milestone payments [14][15] This summary encapsulates the key points from the conference call regarding CSPC Pharmaceutical Group Ltd, highlighting its financial performance, future outlook, and market positioning within the pharmaceutical industry.

Investment Rating - The report maintains a "BUY" rating for CSPC Pharmaceutical, indicating a potential return of over 15% over the next 12 months [15]. Core Insights - CSPC's total revenue is projected to decline by 7.8% YoY to RMB29.0 billion in FY24, primarily due to significant drops in oncology and cardiovascular drug sales [7]. - The company anticipates a return to positive organic revenue growth in FY2025, driven by new product launches and business development (BD) initiatives [7]. - CSPC has made substantial progress in out-licensing innovative assets, aiming to secure 3-4 out-licensing deals annually to generate recurring revenue [7]. - The target price for CSPC is revised to HK$5.71 from HK$5.97, reflecting a 15.5% upside from the current price of HK$4.94 [3][7]. Financial Summary - Revenue for FY23 is reported at RMB31,450 million, with a slight YoY growth of 1.7%, while FY24 revenue is expected to drop to RMB29,009 million [2][12]. - Net profit for FY23 is RMB6,072.7 million, showing a decline of 2.6% YoY, with further expected declines in FY24 to RMB4,338.8 million [2][12]. - The earnings per share (EPS) for FY23 is reported at RMB0.49, with projections of RMB0.37 for FY24 [2][12]. Business Development and Pipeline - CSPC's business development efforts are expected to create a sustainable revenue stream, with a robust pipeline of 40-50 assets identified for out-licensing potential [7]. - The company is focusing on clinical trials for its EGFR ADC (SYS6010), which is currently in Phase 3 development globally [7]. Market Performance - CSPC's market capitalization is reported at HK$58,871 million, with a 52-week high of HK$7.12 and a low of HK$4.34 [3]. - The stock has shown a 1-month absolute performance of 4.9% and a 3-month performance of 3.3% [5].

Core Insights - The company reported a revenue of 29.009 billion yuan and a net profit of 4.328 billion yuan for 2024, marking the first decline in both revenue and net profit in nearly a decade due to new market challenges in the pharmaceutical sector [1] - Despite the challenges, the company's gross margin remained stable, and its R&D expenses exceeded 5 billion yuan for the first time, indicating a strong commitment to innovation [1][4] - The company aims to become an internationally influential innovative pharmaceutical enterprise, driven by a dual strategy of innovation and internationalization [1][6] Financial Performance - The company experienced a revenue decline of 28.3% in its oncology segment due to price reductions from centralized procurement, particularly affecting two key anti-tumor drugs [2] - The revenue from the mature drug segment reached 23.736 billion yuan, accounting for over 80% of total revenue, with stable growth from core products and new additions contributing significantly [2][3] Innovation and R&D - R&D expenses increased to 5.191 billion yuan, representing a 7.5% year-on-year growth and accounting for 21.9% of the mature drug segment's revenue [4] - The company has over 200 innovative drugs and formulations in development, with 160 clinical trials ongoing, including nearly 60 in Phase III [4][5] - The company received multiple approvals for new products and indications in 2024, enhancing its product portfolio and market resilience [3][4] Strategic Partnerships and Collaborations - The company has secured significant licensing agreements, including a $100 million upfront payment from AstraZeneca for a drug, with potential milestone payments totaling up to $15.5 billion [7] - The partnerships reflect the company's rapid innovation pace and the successful application of AI in drug development [6][7]

Investment Rating - The report maintains a neutral rating for the company with a target price of HKD 5.80, indicating a potential upside of 14.6% from the current price of HKD 5.06 [1][2][9]. Core Insights - The company's performance in Q4 2024 was negatively impacted by the procurement of Domperidone, but there is a noticeable improvement in the neurology segment. The raw material drug business continues to face slight pressure. It is anticipated that the impact of Domperidone procurement will stabilize entering 2025, and new product launches will drive revenue recovery [2][6]. - The current forward P/E ratio is 11 times, with an expected profit CAGR of 11% from 2024 to 2027, suggesting that the valuation is reasonable with limited upside potential [2][6]. - The company is expected to achieve positive revenue growth in 2025, driven by stable inventory levels of Domperidone, the rapid market penetration of new products, and the inclusion of certain drugs in medical insurance [6][11]. Financial Forecast Changes - Revenue for 2025 is projected at RMB 29,600 million, a decrease of 1.0% from previous forecasts. The gross profit is expected to be RMB 20,868 million, down 3.8% from prior estimates. The net profit forecast for 2025 is RMB 4,754 million, reflecting a 4.4% reduction [5][11]. - The gross margin is expected to be 70.5% for 2025, down from 72.6% previously, indicating a slight decline in profitability [5][11]. Performance Metrics - The company’s stock price has shown a year-to-date increase of 5.86%, with a 52-week high of HKD 7.12 and a low of HKD 4.34 [5][11]. - The average daily trading volume is reported at 214.03 million shares, with a market capitalization of approximately HKD 58,227.19 million [5][11]. Pipeline and Product Development - The company is advancing its pipeline with seven new products expected to launch in 2025, including significant drugs that are anticipated to gain regulatory approval in the U.S. [6][11]. - The most notable pipeline product, EGFR ADC, is undergoing simultaneous registration studies in China and the U.S., indicating a strong commitment to expanding its product offerings [6][11].

Investment Rating - The report maintains a neutral rating for the company with a target price of HKD 5.80, indicating a potential upside of 14.6% from the current price of HKD 5.06 [1][2][9]. Core Insights - The company's performance in Q4 2024 was negatively impacted by the procurement of Domperidone, but there is a noticeable improvement in the neurology segment. The raw material drug business continues to face slight pressure. It is anticipated that the impact of Domperidone procurement will stabilize entering 2025, with new product launches expected to drive revenue growth [2][6]. - The current forward P/E ratio is 11 times, with an estimated profit CAGR of 11% from 2024 to 2027, suggesting that the valuation is reasonable with limited upside potential [2][6]. - The company is expected to launch seven new products or indications in 2025, including significant approvals in the U.S. for certain drugs, which will help offset losses from procurement [6][7]. Financial Forecasts - Revenue projections for 2025 are set at RMB 29.6 billion, a slight decrease of 1.0% from previous estimates. The gross profit is forecasted at RMB 20.87 billion, reflecting a 3.8% decline [5][11]. - The net profit for 2025 is estimated at RMB 4.75 billion, down 4.4% from prior forecasts, with a net profit margin of 16.1% [5][11]. - The company anticipates a recovery in revenue for 2025, driven by stabilized inventory levels and the rapid market penetration of new products [6][11]. Stock Performance - The stock has shown a year-to-date change of +5.86%, with a 52-week high of HKD 7.12 and a low of HKD 4.34 [5][11]. - The average daily trading volume is reported at 214.03 million shares, indicating active trading interest [5][11]. Valuation Metrics - The DCF valuation model estimates the equity value at approximately RMB 60.89 billion, translating to a per-share value of HKD 5.80 [7][11]. - The company is currently trading at a P/E ratio of 11 times for 2025, with a PEG ratio of 1.0, suggesting that the stock is fairly valued [6][7].

Investment Rating - The investment rating for the company is "Buy" with a target price of 8.26 HKD [8][9]. Core Views - The company reported a revenue of 29 billion RMB in 2024, a decrease of 7.8% year-on-year, and a net profit of 4.328 billion RMB, down 26.3% year-on-year, which aligns with previous profit forecasts. The decline is attributed to the impact of tumor drug procurement and inventory pressure, along with falling raw material prices. Looking ahead to 2025, the report anticipates a stabilization in internal profit scale driven by the impact of procurement and accelerated entry of innovative drugs, estimating over 1.5 billion RMB in revenue from new products [1][2][3]. Summary by Sections Revenue and Profit Forecast - The company expects a revenue of 29.594 billion RMB in 2025, reflecting a 2.01% increase, and a net profit of 5.644 billion RMB, representing a 30.41% increase year-on-year [7][18]. Drug Business Outlook - The company's drug segment revenue for 2024 was 23.7 billion RMB, down 7.4% year-on-year, primarily due to procurement impacts and competition. However, the report is optimistic about a recovery in 2025, particularly in the NBP segment, which is expected to grow steadily due to moderate price reductions in negotiations and expansion in retail channels [2][3]. New Product Contributions - The report highlights that the tumor line revenue for 2024 was 4.4 billion RMB, down 28.3% year-on-year, but anticipates new drug contributions exceeding 1.5 billion RMB in 2025, with several new products expected to enter the market [3][4]. Business Development (BD) Acceleration - The company has accelerated its BD efforts, with three successful BD agreements already in place and expectations for 2-3 more by the end of the year. This is seen as a potential source of regular income for the company [4][5]. Valuation Metrics - The estimated EPS for 2025 is 0.49 RMB, with a PE ratio of 15.5 times, leading to a target price of 8.26 HKD. This reflects a discount compared to comparable companies, which are projected at 22 times PE [5][9].

Core Insights - The company reported a total revenue decline of 7.8% year-on-year, primarily due to a decrease in the sales of its prescription drug business, with a slight drop in gross margin by 0.5 percentage points to 70.0% [1] - Shareholder profit attributable to the company decreased by 26.3% to 4.328 billion yuan [1] Revenue Breakdown - Total revenue from various segments includes: - Raw materials: 23,718.33 million yuan - Functional foods: 1,994.26 million yuan - Other categories: 1,588.91 million yuan - Total revenue: 29,404.00 million yuan [2] Business Review - The company underwent structural adjustments in 2024, creating a flatter organizational structure that reduced operational costs and improved decision-making efficiency [4] - The company faced challenges with significant price reductions for two products,津优力 and 多美素, by approximately 58% and 23% respectively [4] - New products launched recently, such as 明复乐 and 多恩益, have shown rapid growth and contributed significantly to sales [4] Research and Development - The company has increased its R&D investment, achieving a steady improvement in R&D efficiency, with 16 production licenses and 66 clinical licenses obtained in 2024 [5] International Expansion - The company is advancing its international strategy by establishing sales companies in the U.S. and Southeast Asia, focusing on high-end complex injection formulations and other advanced products [6] - Collaborations with strategic clients in Indonesia and the Philippines for new drug development are underway, enhancing overseas business contributions [6]

Financial Performance - For the fiscal year ending December 31, 2024, total revenue decreased by 7.8% to RMB 29,009.25 million from RMB 31,450.11 million in 2023[4]. - The net profit attributable to shareholders for 2024 was RMB 4,682.91 million, down 25.4% from RMB 6,275.25 million in 2023[5]. - Basic earnings per share decreased by 24.5% to RMB 39.90 from RMB 52.86 in 2023[4]. - The company proposed a final dividend of HKD 0.10 per share, a decrease of 28.6% from HKD 0.14 in 2023, resulting in a total annual dividend of HKD 0.26, down 7.1%[6]. - The pharmaceutical business recorded revenue of RMB 23.736 billion in 2024, a decrease of 7.4% compared to the previous year[31]. - The group recorded a net loss of RMB 0.118 billion, compared to a net loss of RMB 0.105 billion in 2023[121]. - The company’s net profit attributable to shareholders for 2024 was RMB 4,328.04 million, a decrease from RMB 5,873.33 million in 2023, representing a decline of approximately 26.3%[125]. - The gross profit margin slightly decreased by 0.5 percentage points to 70.0%[119]. - The company reported a total comprehensive income of RMB 4,296,778 for 2024, down from RMB 6,049,146 in 2023[132]. Research and Development - R&D expenses increased by 7.5% to RMB 5.191 billion, accounting for 21.9% of the pharmaceutical business revenue[51]. - The company has built an international R&D team of over 2,000 people, focusing on key therapeutic areas such as oncology and cardiovascular diseases[21]. - The company will continue to focus on eight major innovative R&D platforms and explore new areas such as gene therapy and cell therapy[17]. - The company has developed several first-in-class drugs in China, benefiting over 40 million patients and significantly reducing drug costs[22]. - The company has established eight major technology innovation research and development platforms, including nanomedicine, mRNA, and ADC, providing strong support for innovative drug development[24]. - The company is focusing on unmet clinical needs with its product pipeline, enhancing its competitiveness in the industry[29]. - The company aims to accelerate the R&D, application, and market entry of key innovative drugs in international markets through collaborations with international businesses[18]. Market and Product Development - The company established a new sales company in the U.S. and a new drug development division in Southeast Asia to accelerate the market expansion of high-end complex injectables and biologics[14]. - The company plans to obtain market approval for several key drugs in 2024, including new indications for Mingfu Le® and the first monoclonal biosimilar drug Enyitan®[13]. - In 2024, 91 new drugs were added to the medical insurance list, with 90 being launched within the last five years, including 38 global innovative drugs[8]. - The company completed one licensing-in project and three licensing-out projects, including global rights for JSKN003 and collaborations with AstraZeneca and Baijie Shenzhou[15]. - The company is expanding its pipeline with multiple investigational drugs targeting various cancers and diseases[56]. Sales and Revenue Trends - The sales revenue in the neurological system treatment area was RMB 9.645 billion, an increase of 6.1%[31]. - The oncology treatment area experienced a significant decline, with sales revenue dropping to RMB 4.4 billion, a decrease of 28.3%[31]. - The sales revenue for the anti-infective treatment area was RMB 4.086 billion, down 3.5%[31]. - The sales revenue for the cardiovascular treatment area was RMB 2.079 billion, a decrease of 14.8%[31]. - The respiratory system treatment area saw a decline in sales revenue to RMB 1.199 billion, down 23.1%[31]. - The digestive system treatment area recorded sales revenue of RMB 1.051 billion, an increase of 18.1%[31]. Strategic Initiatives - The company completed a share buyback of HKD 387 million in the first half of 2024 and announced an additional buyback of up to HKD 1 billion, which was completed in November 2024[6]. - The company aims to enhance earnings per share and maximize shareholder returns through share repurchases[171]. - The company has received multiple national recognitions, including being designated as a "National Innovative Enterprise" and having key national laboratories[25]. - The company is actively pursuing collaborations and partnerships to enhance its research and development capabilities[56]. Financial Health and Management - The effective tax rate for the year was 22.2%, with income tax expenses amounting to RMB 1.240 billion[123]. - Cash inflow from operating activities for 2024 was RMB 4,535 million, an increase from RMB 4,179 million in 2023, reflecting a growth of about 8.5%[126]. - The current ratio as of December 31, 2024, was 2.3, down from 2.6 in the previous year, suggesting a decrease in short-term liquidity[126]. - The company's total bank deposits and cash as of December 31, 2024, were RMB 9,187 million, down from RMB 12,755 million in 2023, a decline of approximately 28.5%[127]. - The asset-liability ratio was 1.2% as of December 31, 2024, slightly improved from 1.3% in 2023, indicating stable financial health[127]. Compliance and Governance - The financial statements for the years ended December 31, 2023, and December 31, 2024, have been audited without any reservations, ensuring the reliability of the reported figures[137]. - The company is committed to transparency and compliance with the Hong Kong Companies Ordinance, submitting financial statements as required[137]. - The company adheres to the corporate governance code as stipulated by the Hong Kong Stock Exchange for the fiscal year ending December 31, 2024[166].