Performance summary: in the first three quarters of 2022, the company achieved operating income of 4.11 billion yuan, an increase of 28% over the same period last year, and a net profit of 720 million yuan, an increase of 38.4%. The net profit after deducting non-return was 710 million yuan, an increase of 39.1% over the same period last year. In the third quarter alone, the operating income was 1.41 billion yuan, an increase of 45.2% over the same period last year, and the net profit was 230 million yuan, an increase of 57.6% over the same period last year. The net profit after deducting non-return was 220 million yuan, an increase of 63% over the same period last year. During the reporting period, the company's revenue and profits increased rapidly, mainly due to: 1) the production capacity of fund-raising projects was gradually put on the market, and the production and sales volume of products were increased; 2) the company had rich product matrix, enhanced profitability and scale expansion. Animal protection leading products florfenicol, enrofloxacin contributed revenue of more than 100 million, high market share, the main products also include doxycycline, cypromazine, which are widely used in the field of animal protection. Pharmaceutical industry continues to promote the integration of the industrial chain, to create an intermediate-API-preparation layout structure, the future performance may be further increased.

Veterinary drug products of high quality, future capacity expansion, in the process of increasing the concentration of the industry to further increase market share. The new version of the "Veterinary Drug GMP acceptance Evaluation Standard" will be implemented in June 2020 to raise the entry threshold for veterinary drug production and avoid low-level repeated construction and overcapacity. It is stipulated that veterinary drug manufacturing enterprises must pass the new version of the audit standard before June 1, 2022 before they can continue production and operation, and the backward production capacity will be eliminated by the market. With the development of animal protection API and preparation business, the company has rich product matrix and strong comprehensive competitive advantage, and is expected to benefit from the improvement of concentration. At present, nearly four percent of the company's animal protection plate has become an export business. according to customs data and company prospectus data, in 2019, enrofloxacin API company exported 891 tons, accounting for 59.8% of the country's total exports in 2019. Guobang pharmaceutical florfenicol API exports have become the first place in the market, accounting for 21.9% of the national total. In the future, the company will have an annual production base of 5750 tons of animal protection raw materials, an annual production base of 6000 tons of animal protection preparations, an annual production line of 3000 tons of veterinary drug solid preparations, and a production line of 3000 tons of feed additives and mixed feed additives. bring about performance increments. Pharmaceutical business plate, the company firmly cast quality advantages, promote the integration of the industrial chain. The company is one of the world's largest suppliers of macrolides and quinolones, including antibiotics, cardiovascular, respiratory, urinary and antineoplastic drugs. The main products azithromycin, clarithromycin, roxithromycin, ciprofloxacin hydrochloride are sold more than 100 million yuan of single series. At the same time, the company carries on the production of key pharmaceutical intermediates, focusing on reducing agent series products, high-grade amine series products and so on. In the future, the company's cephalosporin products new / technical renovation project, characteristic API and industry chain improvement project, key intermediate project, pharmaceutical preparation project will be completed and put into production one after another, and revenue will further increase.

The company takes "one system, two platforms" as the core to form a comprehensive advantage. One system refers to effective management and innovation system. The two platforms are advanced and complete large-scale manufacturing platform and extensive and effective global market channel platform. In terms of production and manufacturing, the company has mastered the typical chemical reaction and solvent technology in production, and saved costs through integrated research layout to form the advantage of intensive manufacturing. In terms of channel platform, the company serves customers at home and abroad, integrates domestic and foreign trade, covers sales networks on six continents, sells products to 115 countries and regions, and has established trade and cooperative relations with more than 3000 customers around the world. The company has established API sales channels in India, the Netherlands, South Korea, Pakistan and Spain, and semi-preparation products are also sold to Southeast Asia and Africa. The top five customers of the company in 2020 include Zhejiang Benli, Insud Group, Abbott Group, Shandong Yakang Pharmaceutical Industry and Hetero Group, with a total sales of 360 million yuan, accounting for 8.6% of the company's direct sales revenue of 2.93 billion yuan in 2021, accounting for 65%, and indirect sales accounted for about 35%.

Profit forecast and investment advice. It is estimated that the EPS from 2022 to 2024 will be 1.8,2.24,2.79 yuan respectively, and the corresponding dynamic PE will be times higher than that in 16-13-10, maintaining the "buy" rating.

Risk tips: downstream demand is not as expected, capacity release is not as expected, new product sales are not as expected, and so on.