Incidents: The company released its 2022 report and the first quarter report for 2023. Revenue of 2022 was 765 million yuan, up 34.20% year on year, Guimu's net profit was 235 million yuan, up 61.29% year on year, after deducting non-net profit of 227 million yuan, up 70.03% year on year; revenue for the first quarter of 2023 was 263 million yuan, up 28.00% year on year, and Guimo's net profit was 93.67 million yuan, up 32.45% year on year, after deducting non-net profit of 92.18 million yuan, up 30.18% year on year.

CROICDMO is driving rapid growth, and production capacity and specialty product layout continue to reap. The company's revenue and profit continued to grow rapidly in 2022 and 2301. The profit growth rate was greater than the revenue growth rate. The company's sales, management, finance, and R&D expenses in 2022 totaled 18.23%, a decrease of 9.13 pp over the previous year. The company's 23Q1 revenue and profit all reached record highs in a single quarter. The rapid growth in performance was mainly driven by the rapid development of the CRO/CDMO/CMO business and the rapid growth in sales of some mature API varieties (such as dicyclic alcohol, entecaxel, febusta, posacantol, nebivolol, etc.). Among them, the CRO/CDMO/CMO business revenue in 2022 was 405 million yuan (+46.20%, same as below), accounting for 53.00% of revenue (+4.35pp). Looking at Li Du, 22Q4 revenue was 187 million yuan (+33.30%) to the mother's net profit of 58.3 million yuan (+63.68%), after deducting non-net profit of 61.75 million yuan (+148.17%); 23Q1 revenue +) 8LC6SL* (%gz+) 1986 country E “(%008+) 28930.18%). Looking ahead to 2023 as a whole, the company's performance is expected to maintain a rapid growth trend, driven by the gradual release of new production capacity and continued strong growth in CRO/CDMOICMO business and specialty varieties of API intermediates.

Business segments: CROICDMO is developing rapidly, API intermediate specialty products continue to grow, and the third phase of innovative drugs is imminent. 1) CRO/CDMO is developing rapidly, and the number of projects and customers is steadily increasing. The total number of ongoing projects in 2022 is 33 (14 API projects, 19 advanced intermediate projects; 17 clinical stages, 16 commercialization stages). 2) API intermediate specialty products continue to grow, and the release of new products can be expected. We expect that the current rapid growth will be mainly driven by rapid growth in varieties such as dicyclic alcohol, entecaxel, febusta, desalconazole, and nebivolol. The gradient arrangement of congeners in the company's API is reasonable. Driven by new production capacity and varieties, we believe that the company's API intermediates business is expected to maintain relatively rapid growth. 3) The clinical phase II clinical trial of the innovative drug brozopent has ended. It is about to enter phase III clinical trials, which is expected to bring new long-term growth points.

Expense rate; gross margin remained stable, exchange earnings reduced the cost rate, and investment in R&D continued to increase. Gross profit margin: gross margins for 2022 and 23Q1 were 51.50% (-3.29pp) and 58.89% (+3.25pp), respectively. Among them, the gross margins of liver disease, antimicrobials, cardiovascular, neurological, and gout categories, which account for relatively large revenues, were 69.94% (-0.86pp), 55.19% (+8.52pp), 42.10% (+12.99pp), 36.59% (-12.24pp), 28.31% (+4.10pp), basically remained stable, with gross margins fluctuating mainly for some products Due to fluctuations in order volume. Expense rate: The total cost rates for 2022 and 23Q1 were 9.46% (-5.82 pp) and 7.73% (-0.67 pp), respectively. The decline in the fee rate in 2022 was mainly due to a half-year year-on-year decline of 6.54 pp in financial expenses. This was due to the increase in unexchanged earnings due to exchange rate fluctuations in the Guanyuan exchange rate. R&D expenses: The R&D expenses of 202 and 23Q1 companies were 67.07 million yuan (-2.54%) and 21.46 million yuan (+102.47%), accounting for 8.77% of revenue (-3.31 pp) and 8.17% (+3.01 pp), respectively. R&D remained stable.

Profit forecast and investment suggestions: According to the annual report, considering the company's production capacity and product efficiency, we fine-tuned the profit forecast. The company's 23-25 year revenue is expected to be 1071, 1503, and 2,071 billion yuan (11.54 million yuan and 1,565 million yuan before adjustment in 23 and 24), up 40.1%, 40.4%, and 37.7% year-on-year: Guimu's net profit was 3.30, 464 and 649 million yuan (328 million yuan before adjustment in 23 and 24), an increase of 40.1%, 40.6% and 40.1% over the previous year. The current stock price corresponds to 2022-2024 PE of 41/29/21 times. Considering the rapid development of the company CROICDMO, it is expected that API intermediates will continue to be released as varieties and production capacity are released. The generic drug and innovative drug business layout will create new long-term growth points and maintain the “buying rating.”

Risk warning events: Product development and technological innovation risk: risk of changes in the international trade environment: risk of environmental protection and production safety risk: risk of exchange rate fluctuations: risk of disclosure of information later or not being updated in a timely manner.