Event: the company released the semi-annual performance report of 2023, 23H1 realized revenue of 582 million yuan (- 35.11%), return to mother net profit and deducted non-net profit of 31 million yuan (- 83.29%), 26 million yuan (- 84.95%). In a single quarter, 23Q2 realized revenue of 336 million yuan (- 15.40%), net profit of return to mother and deduction of non-net profit-13 million yuan (- 118.15%) and 14 million yuan (- 77.72%).
Short-term performance is under pressure, mainly affected by COVID-19 and production capacity: 23H1's performance is under pressure, mainly as follows: 1) the market demand has tightened periodically due to the fluctuation of the international political and economic environment; 2) the related orders of COVID-19 have decreased in the current period; 3) Liaoyuan Pharmaceutical Co., Ltd. is no longer merged, and has a certain impact on the production capacity of raw materials. 4) capacity expansion completed and entered the capacity climbing stage: 5) fair value changes in profit and loss caused by foreign exchange hedging business. In terms of profitability, the company's gross profit margin is 30.34% (- 11.92pct) and net profit margin is 5.92% (- 16.99pct). The rates of sales, management, finance and R & D expenses are 3.47% (+ 1.84pct), 13.70% (+ 3.44pct), 2.32%, (+ 1.69pct) and 6.12% (+ 1.20pct) respectively.
The strategic transformation is progressing smoothly, and the future of CDMO+ preparations can be expected: in terms of CDMO business, the company's major customers' recognition has been continuously improved, the special workshop built in cooperation with Merck & Co Inc has been officially put into use, and on the basis of the first phase of cooperation, the second phase of negotiations has been launched, and a number of preparation CDMO projects have been drawn up with KRKA, and there have been confirmed landing projects. In terms of preparation business, the company actively implemented the development strategy of "technology transfer + independent declaration + domestic MAH cooperation", and seized the opportunity of rapid commercialization brought about by collection and acquisition. 23H1 realized 109 million yuan (+ 28.24%) in sales revenue of preparation business. The pace of application for R & D and registration of preparation varieties has been speeded up. By the end of 23H1, a total of 15 preparation products have been approved and listed in China, and a layout of "blockbuster drugs" with expired patents such as cigletine metformin tablets. In terms of API business, the company continues to strengthen market development work, constantly optimize customer structure and product structure, implement the route of multi-category and multi-market for APIs, speed up the R & D and registration of new products, and co-ordinate the layout of production bases. the new and old production capacity is changed in an orderly manner.
Investment suggestion: from 2023 to 2025, we expect the company to achieve an operating income of 1.689 billion yuan, 2.063 billion yuan, and a net profit of 2.40 billion yuan, 288 million yuan. The corresponding PE is 14.81, 12.34 and 9.40 times, respectively, maintaining the "over-holding" rating.
Risk hints: the progress of research and development is not as expected; the progress of capacity construction is not as expected; the risk of exchange rate fluctuations.