Incident: The company released its semi-annual report for 2023, achieving operating income of 315 million yuan, an increase of 37.41% over the previous year; net profit to be 254 million yuan, net profit after non-return net profit of -286 million yuan, and basic earnings per share of 0.61 yuan/share.

Products have entered the harvest period: As of June 30, 2023, 3 of the company's products (Geralit, Prabesh, and Schrell) have been approved for listing in China, 1 product (BAT2094 battefiban) has submitted a marketing license application to the State Drug Administration, 2 products (BAT1706 bevacizumab and BAT1806 tocilizumab) have submitted marketing license applications to the US FDA and the European EMA, 5 products (BAT2206, BAT4406F, BAT2506, etc., BAT5906 BAT2306) is in phase III clinical research, 5 ADC products have entered clinical research, and the company also has a number of products in early clinical and pre-clinical research.

The ADC platform is worth looking forward to: With the completion of the company's next-generation ADC technology platform, antibody-coupled drugs (ADC) are advancing at an accelerated pace. Among them, BAT8006 achieved positive efficacy progress in clinical phase I, and some research results were presented at the American SABCS conference in December 2022. The company's next-generation ADC drugs are mainly formed by connecting antibodies to toxic small molecule topoisomerase I inhibitors through self-developed shear connectors. They have efficient anti-tumor activity, good stability and safety. In the future, the company will expand more targeted ADC products, continue to expand clinical application areas, advance front-line treatment from back-line treatment to front-line treatment, and explore the potential for combined treatment with immunological drugs or targeted drugs.

Investment suggestions: Biotech firmly takes drug research and development as the development tone and continues to promote the technology and product development process. We expect the company to achieve operating income of 682/10.44/1,442 million yuan and net profit of 1.68/0.51/325 million yuan in 2023-2025. Covered for the first time, giving it an “increase in holdings” rating.

Risk warning: the risk of new drug development falling short of expectations, risk of product sales falling short of expectations, risks brought about by macroeconomic pharmaceutical policies, etc.