Incident Overview

The company released its 2022 semi-annual report: operating income of 1,247 million yuan (-2.26%), net profit of 70 million yuan (-78.20%), net profit of the non-return mother of 51 million yuan (93.87%).

The impact of generic drug price reductions has been shown, and cyclopofol is released rapidly

The decline in the company's generic drug performance due to national health insurance negotiations and volume procurement has basically been reflected; with the rapid release of the company's innovative drug cyclopofol, an inflection point in the company's performance has arrived. The company rapidly released cyclopropenol in the first half of the year, with sales reaching about 1.5 million bottles and admission to more than 900 hospitals; the target hospitals covered about 1,400 hospitals throughout the year, with sales reaching 4 million units.

Rapid clinical progress in research pipelines

At present, several of the company's R&D pipelines are progressing rapidly: clinical acceleration of the long-acting hypoglycemic drug HSK7653 is expected to be NDA by the end of 2022; clinical phase 3 trials such as the neuralgia drug HSK16149 and the acute and chronic pain drug HSK21542 are also progressing rapidly. Phase 3 clinical trials of cyclopofol in the US are also advancing at an accelerated pace.

Investment advice

Due to the impact of the pandemic, the company's profit forecast was adjusted. The forecast for the 2022-2023 revenue of 32.50/3.820 billion yuan was 29.6/36.2/4.35 billion yuan for 2022-2024, and the forecast of the 2022-2023 EPS of 0.41/0.58 yuan was lowered to 0.17/0.37/0.54 yuan in 2022-2024, corresponding to the closing price of 17.70 yuan/share on August 16, 2022, PE was 101/48/33 times, respectively, maintaining the company's “buy” rating.

Risk warning

Domestic and international R&D progress of innovative drugs fell short of expectations, and product volume fell short of expectations