Event: the company released its three-quarter report in 2023, with income of 5.94 billion yuan, year-on-year + 19.9%, net profit of 1.79 billion yuan, + 11.5%, and non-return net profit of 1.8 billion yuan, + 12.7% over the same period last year.

Revenue grew by 10.7% in the third quarter from the previous quarter, and changes in exchange rates and investment income affected profit margins. The company's revenue in the first three quarters was 2.03 billion yuan (+ 22.4%), respectively, and the net profit from its mother was 7.2 million (+ 31.1%, 1.4% and 1.1%) respectively. 23Q3 revenue / profit increased by 10.7% month-on-month and 5.4% respectively. The gross profit margin of sales in the first three quarters was 41.9%, down 3.2pp from the same period last year. It is expected that the proportion of white income of agents has increased, as well as the impact of exchange rate fluctuations. The sales expense rate is 4.8 per cent (- 0.9pp), the management expense rate is 4.2 per cent (- 0.5pp), and the sales and management expense rate has declined, which is expected to be mainly due to the rapid growth of diluted expenses on the revenue side. The R & D expenditure rate is 2.2% (+ 0.2pp), and the R & D investment is growing rapidly. The parent net interest rate is 30.1% (- 2.3pp), and the trading financial assets held by Q3 company recorded a loss of 62.74 million yuan.

The implementation of share buyback is completed, demonstrating the long-term value of the company. The company completed its share repurchase on September 1, 2023, and accumulated 140 million shares of listed companies with its own funds through centralized bidding, accounting for 2% of the company's current total share capital. The transaction price range is 7.067.56 yuan per share, with a total transaction amount of about 1 billion yuan. The large amount of repurchase shows that the management has sufficient confidence in the long-term development of the company.

Profit forecast and investment suggestions: the company's operating income from 2023 to 2025 is expected to be 7.58 billion yuan, 8.76 billion yuan and 10.16 billion yuan respectively, and the net profit returned to its mother is 2.17 billion yuan, 2.52 billion yuan and 2.93 billion yuan respectively. The company's own blood products business profitability is outstanding, agent importers to enhance the industrial status, maintain the "buy" rating.

Risk hints: the risk that the pulp production is not up to expectations; the risk of intensified competition in the industry; the risk of exchange rate fluctuations.