Main points of investment

Event: the company released its three-quarter report in 2023, with operating income of 1.348 billion yuan (year-on-year + 160%), net profit of 410 million yuan (+ 661%) and non-return net profit of 380 million yuan (+ 1869%) during the reporting period.

Comments: Q3 company's revenue accelerated, sales revenue increased for 7 consecutive quarters, first-line indications were approved and successfully included in the health insurance catalogue, the Q3 company's sales volume changed qualitatively, and the omni-directional layout of Fumetinib in terms of indication expansion. The opening of the international multicenter phase III clinical trial of EGFR20 exon mutation NSCLC, the readout of early data of related indications and the clinical layout of rare mutations in EGFR are expected to continue to improve the global space. With the release of vermetini, the scale effect is gradually reflected, and the rate of management and R & D expenses decreases.

Profit forecast and valuation: with the approval of the first-and second-line treatment of the blockbuster product Vumetinib, the smooth progress of clinical trials of indications such as adjuvant therapy and exon 20 mutation, as well as the overseas progress of the product, the company is expected to rapidly expand its volume at the sales end and open up room for future growth. With the acceleration of sales revenue, we adjust our profit forecast that EPS will be 1.15,1.65 and 2.02 yuan in 2023-2025. The price-to-earnings ratio corresponding to the closing price on October 26, 2023 is 31X, 21.5X and 17.6X respectively, maintaining the "overweight" rating.

Note: Ellis is a market maker for Societe Generale Securities.

Risk tips: new drug research and development is not up to expectations, product sales are not up to expectations, etc.