Core viewpoints

On October 23, the company released a report for the third quarter of 2023, showing steady growth in revenue from its main business and better-than-expected performance at the profit end. The company's gross profit margin showed an upward trend compared with the same period last year and month-on-month, which is expected to be related to the increase in the proportion of high-margin varieties and the increase in prices. The increase in gross profit margin and the optimization of superimposed expenses will lead to an increase in the company's net profit margin. In addition, the company's increase in payback has brought about continuous optimization of operating cash flow. Looking to the future, the landing progress of the company's synthetic biology varieties is worthy of attention, and the first phase of the project is expected to be completed and enter the trial production phase by the end of this year, which is expected to bring new performance growth points.

Event

The company releases the third quarter report of 2023

On October 23, the company released the semi-annual report of 2023, showing that the operating income in the first three quarters of 2023 was 3.581 billion yuan, an increase of 21.83 percent over the same period last year, and the net profit of returning to the mother was 640 million yuan, an increase of 92.65 percent over the same period last year, deducting 639 million yuan of non-return net profit, an increase of 72.52 percent over the same period last year.

In 2023, Q3 achieved an operating income of 1.164 billion yuan in the single quarter, an increase of 21.81 percent over the same period last year, and its net profit was 249 million yuan, an increase of 162.02 percent over the same period last year, deducting 247 million yuan from non-parent net profit, an increase of 85.01 percent over the same period last year.

Risk hint

Risk of price fluctuation of main products: the company's main business is antibiotic intermediates. At present, the prices of penicillin intermediates, cephalosporin intermediates and erythromycin thiocyanate are rising in recent years. If the price fluctuates obviously in the future, it will affect the growth of the company's main business income. Industry competition aggravates risks: at present, the market competition pattern of the company's main products is relatively stable, and if further price increases bring more competitors to join the market in the future, intensified competition may lead to a decline in the company's profitability. In addition, if there is a new capacity supply in India and other international markets, there may be a risk of fluctuations in the company's raw material prices: at present, the national drug procurement and medical insurance negotiations are gradually normalized, and some generic drug varieties of the company have not been included in the collection. The decline in the price of related varieties after collection may have a certain impact on the income of this variety in the future.

Risk of change in overseas demand: a certain proportion of the company's current products and future synthetic biology products are used for export, and a decline in overseas demand will adversely affect the company's performance.

Risk of rising raw material costs: according to the company's previously disclosed cost composition, direct materials account for more than 50% of the main business costs, including corn, soybean cake powder, oil and other raw materials needed in the process of biological fermentation, related raw material price fluctuations will have a negative impact on the company's profit level.