Event: the company released the three-quarter report of 2023, the company achieved total operating income of 10.682 billion yuan in the first three quarters of 2023, an increase of 10.73% over the same period last year; net profit of 3.612 billion yuan, up 4.27%; and net profit of 3.616 billion yuan, an increase of 5.42% over the same period last year.

From a quarterly point of view, 23Q3 realized operating income of 4.514 billion yuan (+ 18.32%), net profit of 1.452 billion yuan (+ 7.98%) and non-return net profit of 1.452 billion yuan (+ 9.05%). In the third quarter, the terminal of growth hormone recovered, the amount of shingles began to release, and the income grew better; the profit growth rate was slower than the income growth rate, which is expected to be related to the decline of growth hormone gross profit margin and the increase of R & D expenses.

Jinsai Pharmaceutical Industry: growth hormone recovers quarter by quarter. In the first three quarters of 2023, Jinsai Pharmaceutical achieved an income of 8.118 billion yuan, an increase of 3.81% over the same period last year; a net profit of 3.524 billion yuan, an increase of 1.56% over the same period last year; and a net interest rate of 43.41%, still at a high level. Jinsai Pharmaceutical insists on compliance development, significantly improves the development speed of new customers through promotion model innovation, increases the promotion of long-term water needles, and increases net sales, new patients, new customers and so on.

Other sectors: a new increase in the 100-immune vaccine herpes zoster. In the first three quarters of 2023, Baike Bio realized income of 1.243 billion yuan, an increase of 43.53 percent over the same period last year, and net profit of 331 million yuan, an increase of 56.13 percent over the same period last year. Huakang Pharmaceutical achieved an income of 516 million yuan, an increase of 7.72% over the same period last year, and a net profit of 28 million yuan, an increase of 12.00% over the same period last year. The income of high-tech real estate was 775 million yuan, an increase of 32.25% over the same period last year, and the net profit was 76 million yuan, down 13.64% from the same period last year.

The company plans to transfer its 100% stake in high-tech real estate to Chaoda Group, the company's controlling shareholder, and will continue to develop its main business and further focus on the focus of biological drugs.

Sales rates have declined, while R & D rates have increased significantly. In the first three quarters of 2023, the company's sales expenses were 2.815 billion yuan (+ 2.37%) and the sales rate was 26.35% (- 2.15pp). The company is still actively promoting growth hormone, especially long-acting water needles. The management fee is 565 million (- 0.33%) and the management fee is 5.29% (- 0.59pp). The R & D cost is 1.167 billion yuan (+ 25.16%), and the R & D rate is 10.92% (+ 1.26pp). The company actively develops growth hormone indications, vaccine research and development, etc. In the first three quarters of 2023, the inventory balance was 5.071 billion yuan, accounting for 17.10% of assets (- 1.88pp).

Accounts receivable and notes receivable are 947 million yuan, accounting for 8.86% of income (- 18.67pp).

Profit forecast and investment advice: combined with the third quarter results and terminal sales, we adjusted the company's operating income from 2023 to 2025 to 142.71 yuan, 164.08 yuan and 19.047 billion yuan respectively (before the adjustment was 148.82 yuan, 175.59 yuan and 20.466 billion yuan), an increase of 13.02%, 14.97% and 16.09% over the same period last year. The net profit of homing was 45.70,52.13 and 5.913 billion yuan respectively (before the adjustment was 47.88,55.38,63.81 yuan), an increase of 10.39%, 14.05% and 13.44% over the same period last year.

The company is the leader of the growth hormone industry, still benefits from the high prosperity of the industry, is expected to continue to maintain rapid growth in the future, maintain the "buy" rating.

Risk tips: the risk of increased growth hormone competition, the risk that the progress of the research pipeline is lower than expected, and the risk of drug price reduction through bidding.