Investment Rating - The report maintains a "BUY" rating for CSPC Pharmaceutical, with a target price revised to HK8.16, indicating a potential upside of 21.1% from the current price of HK$6.41 [2][4]. Core Insights - CSPC reported FY23 revenue of RMB31.45 billion, reflecting a 1.7% year-over-year growth, and an attributable net profit of RMB5.87 billion, down 3.6% year-over-year. The adjusted net profit increased by 2.8% year-over-year to RMB6.28 billion [2]. - The company expects new products to significantly contribute to revenue in 2024, forecasting an additional RMB3.5-3.6 billion from these products [2]. - CSPC's R&D expenses rose by 21.2% year-over-year to RMB4.83 billion, indicating a strong commitment to innovation [2]. Financial Performance Summary - Revenue: FY23 revenue was RMB31.45 billion, with projections of RMB34.80 billion for FY24E, representing a 10.6% growth [3][9]. - Net Profit: FY23 attributable net profit was RMB5.87 billion, with expectations of RMB6.68 billion in FY24E, a 13.7% increase [3][9]. - Gross Profit Margin: The gross profit margin decreased to 70.5% in FY23 from 71.9% in FY22, with expectations of 70.3% in FY24E [3][10]. Sales Performance - Finished Drugs: Sales of finished drugs increased by 4.6% year-over-year to RMB25.64 billion, although there was a slight decline in the second half of FY23 due to anticorruption measures in China [2]. - CNS Products: CNS products saw a 12.1% year-over-year growth, primarily driven by strong sales of NBP [2]. - Oncology Products: Sales of oncology products fell by 16.4% year-over-year, largely due to a significant price cut for Keaili [2]. New Product Pipeline - CSPC has several new products expected to drive sales growth, including Mingfule, Yiluoda, and Anfulike, with management forecasting substantial revenue contributions from these products in 2024 [2][3]. - The company has had four drugs added to the National Reimbursement Drug List (NRDL) since early 2024, enhancing market access [2]. Valuation Metrics - The report provides a DCF valuation of RMB7.76 per share, with a WACC of 11.78% and a terminal growth rate of 2.0% [4][10]. - The P/E ratio is projected to decrease from 13.0x in FY23 to 10.5x in FY24E, indicating potential undervaluation [3][10].
New products to contribute meaningful revenue in 2024