Overview of events

The company released the semi-annual report of 2023: in the first half of 2023, the company achieved operating income of 405 million yuan (+ 8.09%), net profit of 109 million yuan (+ 40.61%), and non-return net profit of 101 million yuan (+ 37.13%). The company's 2023Q2 realized operating income of 211 million yuan (+ 10.34%), net profit of 57 million yuan (+ 140.93%), and non-return net profit of 55 million yuan (+ 161.72%).

High growth of core sales products and good market competition pattern

In the first half of 2023, the sales income of the company's core products "Aitinjiu" dapoxetine hydrochloride tablets and Heweizheng intestinal pills increased by a large margin. The market competition pattern is good: the sales income of sexual health drugs is 143 million yuan (+ 36.15%), and that of gastrointestinal drugs is 96 million yuan (+ 55.80%). Valentin's sales revenue declined slightly: ophthalmology drugs achieved sales revenue of 84 million yuan (- 1.90%).

Mining clinical differentiated products and continuously enriching product matrix

The company acquired 50% stake in Bochuangyuan in February 2023, thus obtaining CKBA global innovative small molecule drugs. CKBA ointment was successfully approved to carry out phase 2 clinical trials of vitiligo indications in July 2023, which is expected to create a new profit growth point for the company and promote the company's long-term development in the future. The company announced in July 2023 that it intends to acquire a complete set of production technology from Thailand and Weiwei. In the future, Hewei Zhengchang pills will become the company's own OTC drugs, and we believe that after increasing the overall production capacity, it will add new driving forces for the company's development in the future.

Investment suggestion

Adjust the company's profit forecast for 2023-2025: it is estimated that the company's operating income in 2023-2025 is 946 million yuan, 11.65 billion yuan, respectively (the previous value is 1.545 billion yuan, respectively), and the EPS in 2023-2025 is 0.62 pound 1.10 yuan, respectively, which corresponds to 18.20 yuan per share on August 28, 2023. From 2023 to 2025, the PE was 29x22x17X respectively, maintaining a "buy" rating.

Risk hint

The risk that the effect of product promotion and research and development is not as expected, the progress of new drug listing and the market performance after listing are not as expected; the risk of agency business operation; the risk aggravated by market competition