On August 18, Nanxin Pharmaceutical announced its 2020 mid-year report. It achieved operating income of 581 million yuan during the reporting period, an increase of 27.77% over the previous year, and achieved net profit of 49.52 million yuan belonging to the parent company, an increase of 40.97% over the previous year. Net profit returned to the parent company after deduction was 49.57 million yuan, an increase of 45.81% over the previous year. The second-quarter revenue was 255 million yuan (+15.05%), and net profit attributable to the parent company was 23 million yuan (+59%).

Profit forecast: The company was listed on the Science and Technology Innovation Board on March 26, 2020, and continues to increase investment in innovative drug research and development. Sales of the company's innovative drug, peramivir chloride injection, are growing rapidly, and there is broad room for market growth. At the same time, the company has carried out research and development of two improved new drugs based on peramivir injections, paramivir inhalation solution and paramivir dry powder inhaler. The anti-tumor targeted drug metafenil is also in clinical trials. Currently, a good trend has been formed where 1 innovative drug is on the market, 3 innovative drugs, and 2 improved new drugs are being developed. R&D investment and innovation results are continuously advancing, providing a guarantee for continued growth in performance. For the first time, it covered the company's profit forecast. The EPS for 2020-2022 is expected to be 0.88 yuan, 1.17 yuan, and 1.55 yuan respectively, and the price-earnings ratios corresponding to the closing price on August 24, 2020 are 69.6X, 52.2X, and 39.5X respectively, giving it a “prudent increase in holdings” rating.

Risk warning: Uncertainty in drug marketing approval, iterative technology upgrades, increased competition for core products, and price declines due to volume procurement