Recently, Ganli Pharmaceutical released its 2021 semi-annual report. During the reporting period, the company achieved operating income of 1,475 million yuan, an increase of 22.20% over the previous year; achieved net profit of 373 million yuan, 21.17% over the same period last year; and achieved net profit of 340 million yuan after deducting non-return mother's net profit, an increase of 22.03% over the previous year.

Profit prediction and rating: As the first Chinese company to successfully develop, produce and industrialize recombinant insulin analogs in China, the company has long been in a leading position in the domestic third-generation insulin industry. With the company's active layout in overseas markets in recent years, its competitiveness in the international market has continued to improve, and it will soon usher in new performance growth points. At the same time, competition in the domestic diabetes medication pattern is intensifying, and bioanalogues face the risk of being collected and reduced in price. We adjusted our profit forecast for the company. It is estimated that the company's EPS for 2021-2023 will be 2.55, 2.96, and 3.46 yuan respectively, and that the corresponding PE for the stock price on August 31, 2021 will be 32X, 27X, and 23X respectively, maintaining the “prudent increase in holdings” rating.

Risk warning: risk of price reduction in insulin collection; insulin sales falling short of expectations; development of new products is progressing slower than expected; overseas market development is lower than expected; risks related to centralized procurement.