Items:

On August 29, the company released its semi-annual report of 2022. In the first half of 2022, the company achieved revenue of 796 million yuan, an increase of 27.69% over the same period last year, a net profit of 288 million yuan, an increase of 27.75% over the same period last year, and a deduction of 270 million yuan for non-net profit, an increase of 22.81% over the same period last year.

Comments:

The export of preparations has maintained rapid growth, and the approval of ANDA is expected to accelerate. In the first half of 2022, according to the company's overall revenue, we expect the company's preparation export business to achieve rapid growth compared with the same period last year. Since the release of new production capacity in 2020, the company's declaration has shown an obvious accelerated state. According to the company's mid-report, the company has 17 American ANDA varieties in the declaration process. Judging from the approval of the product, we also see a clear acceleration trend. In August 2022 alone, the company achieved the approval of two products: daptomycin and sodium nitroprusside injection. Looking to the future, with the acceleration of the company's ANDA approval, we expect the company's preparation export business to continue to maintain the trend of rapid growth.

Under the pressure of the epidemic, domestic preparations have also maintained a good growth trend. Considering that the company's domestic business still accounts for the majority of revenue, judging from the overall revenue growth, we expect the company's domestic business to achieve relatively rapid growth in the first half of the year under the pressure of the epidemic. Considering: 1) the multi-point distribution of the domestic epidemic situation has caused certain pressure on the transportation and sales of the company's domestic preparations; 2) the large varieties of the company's stock have been collected and have been reflected in the statements in the first half of this year; 3) the approval of the company's domestic preparations has also shown an accelerated trend, and the approval of large varieties such as voriconazole and sodium nitroprusside injection is expected to bring more growth power to the company. We expect that with the control of the domestic epidemic and the further release of new varieties in the second half of this year, the company's domestic preparation business is expected to further accelerate.

The generic drug business is getting better and better, and the path of innovation is gradually clear. From the short to medium dimension, we believe that with the gradual opening of the company's safe API base and the commissioning of Hainan new preparation workshop, the approval of new products in the United States and China has accelerated. The company's generic drug business with the integration of API preparations is expected to contribute a relatively clear driving force for the company's growth. From a longer perspective, through cooperation with domestic universities, high-energy institutes and other relevant scientific research institutions, the path for the company to upgrade to innovation is also gradually clear, the main focus of boron neutron capture therapy (BNCT) boron drugs, mRNA drugs, SiRNA drugs and other fields, the future research and development, especially in the direction of boron drugs, is expected to bring considerable performance increment to the company.

Investment suggestion: taking into account the short-term pressure of the epidemic and the release rhythm of new varieties, we adjust the company's 2022-2024 net profit forecast to 5.87,7.63 and 1 billion yuan (the previous value is 6.01,7.89 and 1.059 billion yuan in 22-24 years). Year-on-year growth of 40.8%, 30.1% and 31.0% The EPS was 1.34,1.75,2.29 yuan respectively (the previous value was 1.38,1.81,2.42 yuan in 22-24 years). The current stock price corresponds to the PE of 21 times, 16 times and 12 times respectively from 2022 to 2024. With reference to the valuation of the comparable company, 20 times PE will be given in 2023, corresponding to the target price of 35 yuan. Maintain the "push" rating.

Risk tips: 1, product sales volume is not up to expectations; 2, production capacity construction progress is not up to expectations; 3, product approval progress is not up to expectations.