Report guide Judging from sample hospital data: Although 2020Q1-Q3 was affected by the epidemic, anti-VEGF drugs used to treat fundus diseases such as Compazip in July-September showed significant acceleration in dosage. We believe that at present, the education of patients using drugs for fundus diseases such as Compazip has achieved great results. The health insurance payment dividend (sharp price cut+entry of major indications into medical insurance) +low penetration rate is expected to drive the industry to an inflection point of upward acceleration, while Compazip's flexible drug donation plan is expected to drive it to achieve faster distribution among price-sensitive patients. More importantly, if in overseas phase III clinical trials head-to-head with abvacip, the clinical effect of lower injection frequency is comparable to that of abvacip, we believe it is expected that the revenue side of Compassip will accelerate further. Key investment points We have different perceptions from the market: we believe that there is still a lot of room for the subsequent increase in the market share of Compassip. The market generally believes that judging from the pace and competitive pattern of fundus diseases such as Compassip in 2013-2019, there is not much room for the market share of Compassip to rise in the future. We believe that the industry has entered an accelerated upward phase, and there is a lot of room for improvement in Compaq's market share. We believe that in 2019, the penetration rate of anti-VEGF drugs in the field of fundus diseases ushered in an upward acceleration inflection point. We believe that since ranibizumab and comvacip entered the Chinese market in 2012 and 2014, and both entered health insurance in 2018, we have achieved great results in educating patients and doctors about medication habits for fundus diseases after marketing, and we believe that the accelerated release (sales volume) of comboside in 2018-2019 confirms this. We believe that benefiting from the entry of major indications such as DME and PMCNV into health insurance in 2020, the penetration rate of anti-VEGF drugs in the field of fundus disease treatment is expected to accelerate. We believe that the logic of low penetration in the fundus disease industry only really began to show in 2019. In the next 3-5 years, it is still expected that the three core varieties of drugs used for fundus diseases, combasip, ranibizumab, and abancip, will continue to be rapidly released, leading to a continued rapid increase in penetration rates. Furthermore, at present, the penetration rate of anti-VEGF drugs in patients with fundus disease in China is still very low (according to our estimates, the coverage rate of anti-VEGF drugs such as Compazip in 2012-2019 for patients with fundus disease is only 2%). Compared with the estimated 31.9% penetration rate in the US market, there is still plenty of room for improvement, and we are optimistic that the fundus drug industry will enter an upward acceleration inflection point. And Compazip's flexible drug donation plan is expected to drive it to achieve faster dosing in price-sensitive patients. What is more important is that in overseas phase III clinical trials head-to-head with abvacip, the clinical effects of lower injection frequency are comparable to those of abvacip. We believe it is expected to accelerate the increase in the company's market share in the domestic market, which in turn ushered in a further acceleration in the revenue side of Compassip. After the epidemic has abated, the short-term accelerated volume trend of Compassip 2020Q4-2021 is still expected to continue. The year-on-year growth rate of Compassip's sales from March to September 2020 will continue to accelerate, and the short-term accelerated volume trend in 2020Q4-2021 is still expected to continue. From sample hospital data, it can be seen that since the February epidemic and the impact of the Spring Festival holiday brought low sales of Compazip, the monthly sales growth rate in March-September continued to increase year-on-year. In September 2020, the sales growth rate of the Compaxip sample hospital reached 12.72% year on year, and the corresponding sales volume increased by 50.38% year on year, a significant increase. We believe that although the pandemic has affected the sales of drugs such as Compassip in hospitals in the short term, the reduction in medical insurance prices has directly stimulated higher demand on the demand side (as can be seen from the continuous rapid increase of compassip, ranibizumab, and abancip in July-September 2020), and the demand side is still expected to continue to be released after the pandemic is over, driving the continued acceleration of Q4 performance. However, based on the low base of sales under the influence of the 2020 pandemic, 2021 revenue is no longer affected by price reduction factors compared to 2020, so we believe that Compaq Sheep's revenue side growth rate in 2021 is expected to accelerate faster. It is worth looking forward to the revelation of the mid-term overseas phase III clinical data of Compassip. It is expected to help accelerate the increase in market share in the future. The global multicenter phase III clinical trial of Compazip NaMD indications completed 100% enrollment on December 24, 2019. On September 25, 2020, the global phase III clinical trial for the treatment of NaMD completed the 36th week of the main endpoint of all participants. It is expected that the relevant interim data analysis results will be announced in 2021Q1. Currently, the clinical trial continues as planned. According to the clinical trial timeline, the company's data collection for the 96-week overseas phase III clinical trial of Compazip will be completed in 2021 Q4, and overseas production is expected to be around the second half of 2022. What is more important is that in overseas phase III clinical trials head-to-head with abvacip, the clinical effects of lower injection frequency are comparable to those of abvacip. We believe it is expected to accelerate the increase in the company's market share in the domestic market, which in turn ushered in a further acceleration in the revenue side of Compassip. Profit forecasting and valuation. Using the DCF discount method, we obtained the current value of Combassip's sales in the Chinese, US, and European markets corresponding to 17.5 billion, and 18.5 billion dollars, respectively, with a total current value of about 47 billion yuan. We believe that there is still a lot of room for improvement in the company's sales of Compaxip in the future. As an internationally competitive bioinnovative drug company, there is still room for improvement in the company's valuation as indications such as WaMD, DME, and RVO gradually go public in overseas markets and begin to contribute to performance. We expect EPS in 2020-2022 to be 0.85, 1.02, and 1.19 yuan respectively, and the closing price on November 27, 2020 is 41 times that of PE in 2021. Referring to comparable companies Hengrui Pharmaceutical, Fosun Pharmaceutical, Changchun Hi-Tech, Jingxin Pharmaceutical, and Pien Tsai, with an average valuation of 58 times PE in 2021, we believe that the company is in a leading position in the field of bioinnovative drugs and gave it a “buy” rating. Risk indicates policy risk, market competition risk, risk of clinical progress of innovative drugs falling short of expectations or risk of clinical development failure, and risk of product sales falling short of expectations