Event:

Recently, the company released its first quarter report for 2024. The company's operating income in the first quarter of 2024 was 0.381 billion yuan (year-on-year +49.24%), R & D expenses were 0.276 billion yuan (year-on-year -47.64%), sales expenses were 0.192 billion yuan (year-on-year +4.91%), management expenses were 0.123 billion yuan (year-on-year +8.98%), net profit attributable to parent was -0.283 billion yuan, and net profit deducted from non-parent was -0.307 billion yuan.

point of view:

2024Q1 Tuoyi sales revenue increased significantly, the company's overall operating efficiency, the loss narrowed. In the first quarter of 2024, the company's revenue was 0.381 billion billion yuan, up 49.24 percent from the same period last year. The growth of operating income mainly came from the growth of commercial drug sales revenue. Among them, the core product Treplimab achieved sales revenue of 0.307 billion billion yuan in the domestic market, up 56.82 percent from the same period last year. The company continued to strengthen cost control and optimize resource allocation, 2024Q1 research and development costs of 0.276 billion yuan, down 47.64 percent year-on-year, sales costs of 0.192 billion yuan, up 4.91 percent year-on-year, management costs of 0.123 billion yuan, up 8.99 percent year-on-year. 2024Q1 Company's net profit -0.283 billion yuan, non-return net profit -0.307 billion yuan, loss narrowed by 2.60/0.252 billion yuan YoY. As of March 31, 2024, the Company had $4.559 billion in cash on hand.

2024 Tuoyi domestic health insurance indications are expected to be expanded to 10, overseas commercialization smoothly. Up to now, 8 indications of Tuoyi have been approved in China and 6 have been included in the national medical insurance catalogue.

2024Q2, Tuoyi is expected to add 2 new approved indications (1L TNBC, 1L ES-SCLC), so this year the medical insurance indications are expected to be expanded to 10, of which 4 or exclusive medical insurance indications (peri-surgical NSCLC,1L RCC,1L TNBC, 1L ES-SCLC). In overseas markets, the commercialization of Treplimab in the United States was officially launched in January 2024, and the peak sales of NPC indications are expected to reach $0.2 billion. In 2024, Treplimab is expected to be approved for listing in more overseas countries/regions: listing applications have been accepted in the European Union, the United Kingdom, Australia, and Singapore, and listing applications have been submitted in India, South Africa, Chile, and Jordan.

2024 the company's core pipeline catalyst rich. 1) Angorexizumab (PCSK9) for hypercholesterolemia was approved by NMPA for listing; 2) Triprimab (PD-1) two phase 3 clinical data readout, perioperative ESCC and 1L HCC respectively; 3)Tifcemalimab(BTLA) for PD-(L)1 monoclonal antibody refractory cHL phase 3 clinical completion of all subjects into the group; 4)JS005(IL-17A) for psoriasis Phase 3 clinical completion patient recruitment; 5)JS105(PI3Kα) and JS001 SC (PD-1 subcutaneous injection type) start key clinical.

investment advice:

we forecast the company's operating income in 2024/25/26 to be 21.10/34.42/4.705 billion yuan, and the net profit attributable to the parent company to be -10.63/0.12/1.018 billion yuan. Assuming a WACC of 9% and a perpetual growth rate of 3%, we use the DCF method and the NPV method for valuation and take the average of the two, and measure the target market value of RMB 59.342 billion and the corresponding share price of RMB 60.20. Maintain a "buy" rating.

Risk Warning: Research and development or sales are less than expected risk, industry policy risk.