Revenue from core products continues to grow steadily. The product income of the company in the first half of 2023 was 236 million yuan, compared with 200 million yuan in the same period in 2022, an increase of 17.69% over the same period last year. The net profit of returning to the mother was 156 million yuan, deducting the non-return net profit of-148 million yuan, compared with the net profit of-19 million yuan in the same period of 2022. In the second quarter, the operating income was 135 million yuan, an increase of 21.14% over the same period last year and an increase of 26.76% month-on-month.

The net profit of returning to the mother is 188 million yuan. Operating income in the first half of the year increased by 11.89% over the same period last year, mainly due to steady growth in sales of the two major commercial products during the reporting period.

The indication of cedarben hematoma led to a steady increase in income, and the increase in sales of ciglitazide sodium was remarkable after entering health insurance. Cedaben, the company's core product, has maintained steady growth in blood tumors, and breast cancer indications still account for a small proportion of sales without health insurance, with sales revenue of 228 million yuan in the first half of the year, an increase of 17.40% over the same period last year.

The company's core product, Sieglitazem, began to implement health insurance prices in March. Sales increased by 456.26% over the same period last year. Affected by the decline in unit prices, sales revenue in the first half of the year reached 7.5077 million yuan, an increase of 28.38% over the same period last year.

The new adaptation of the core products has been accepted and the R & D project is progressing smoothly. On July 5, 2023, the application for marketing license of cedarbamide combined with R-CHOP for the treatment of new indications of MYC and BCL2 positive DLBCL was accepted by the State Drug Administration. On June 20, an application for the listing of new indications for the treatment of adult type 2 diabetes with siglitar sodium combined with metformin was accepted. Sioroni has been enrolled in the treatment of small cell lung cancer smoothly, and 2023Q4-2024Q1 is expected to submit a listing application.

Earnings forecast and valuation: the company's revenue will continue to grow with the expansion of the market for core products (cedarben and Siglita sodium) and the expansion of sales volume and indications after entering health insurance. The steady progress of the examination and approval of expansion indications, as well as the expansion of production lines, have brought growth momentum for the company. We forecast that from 2023 to 2025, the company's income will be 586 million yuan, 714 million yuan and 866 million yuan respectively, corresponding to 0.58,0.05,0.08 yuan per share respectively.

Risk tips: product sales are not as expected, R & D progress is not as expected, market competition is intensified, the risk of a sharp decline in prices, and so on.