The performance is in line with expectations, and a number of factors continue to put pressure on profits in the short term.

2023H1 achieved revenue of 844 million yuan, an increase of 14.89% over the same period last year, net profit of 114 million yuan, down 25.61%, and non-return net profit of 108 million yuan, down 28.36% from the same period last year. Looking at Q2 alone, the company achieved revenue of 461 million yuan, an increase of 15.44% over the same period last year; net profit of 56 million yuan, down 31.76% from the same period last year; and net profit of 67 million yuan, down 22.48% from the same period last year. Affected by many factors, such as depreciation of new production capacity (depreciation amount of 52.2666 million yuan in the current period), increase in labor costs (an increase of 70 million yuan over the same period last year), interest expenditure on convertible bonds (23.5874 million yuan in current interest expenditure), and provision for impairment of projects under construction (11.3814 million yuan), profits are under short-term pressure. 2023H1 has 600 active customers and 35 new customers; orders from large multinational pharmaceutical companies totaled 230 million yuan, an increase of 13.11% over the same period last year. Considering the increase in the company's expense side, we downgrade our profit forecast for 2023-2025. It is estimated that the net profit of homing in 2023-2025 will be RMB 2.99 million (RMB 540 million) and EPS will be RMB 1.89 2.29. The current share price corresponds to 21.0 times of PE, considering the continuous deepening of cooperation with major customers and the low valuation to maintain the "buy" rating.

Under the guidance of market demand, the number of new molecular blocks continues to increase.

The revenue of 2023H1's molecular block business reached 183 million yuan, an increase of 5.36% over the same period last year. The company focuses on the R & D and innovation of molecular blocks, accumulatively designs more than 200000 molecular blocks, independently synthesizes 40,000 compounds, and continues to develop cutting-edge products to meet and guide market demand. 2023H1 has designed more than 7000 new molecular blocks and completed the synthesis of more than 4000 new molecular blocks.

CDMO pipeline continues to expand, capacity construction is steadily promoted, and continues to empower global customers.

The revenue of 2023H1's CDMO business reached 651 million yuan, an increase of 17.35% over the same period last year. The company's project pipeline has been continuously expanded, with a total of 1150 preclinical to clinical Ⅱ projects, including 31 API projects and 2 DS/DP joint projects; 35 clinical Ⅲ to commercial projects, including 2 API projects, and 25 of 35 API projects from European and American customers. 2023H1 American Pharmaceutical Stone's process R & D center in West Chester has been officially opened to further strengthen the delivery capacity of the American pharmaceutical stone clinical phase GMP project; Huishi production base factory 502workshop has the full production capacity in 2023Q1 and realizes the delivery of multiple API products.

Risk tips: the risk of major customer order fluctuations, the risk of customer loss, capacity climbing is not as expected.