Items:

The company announced its quarterly report for 2023, with a revenue of 698 million yuan (- 46.44%), a net profit of 41 million yuan (- 88.65%) and a net profit of 34 million yuan (- 90.68%). Basically in line with expectations.

Peace viewpoint:

Under the order / capacity mismatch, the utilization rate of large-scale capacity needs to be improved, and the settlement of Q3 fee is less. Q3 delivered nearly 100 million yuan of large orders, and it is estimated that there will be a certain increase in revenue after excluding large orders. Under the dual effect of large order delivery and pharmaceutical investment and financing not as expected, the company is still in the state of order / capacity mismatch, and the utilization rate of large-scale capacity is insufficient. Q3 single-quarter comprehensive gross profit margin of 42.67%, year-on-year-10.47pct, month-on-month + 0.32pct. Under the condition that the demand for orders is basically stable, it is estimated that there is room for a small decline in the gross profit margin of conventional business.

Q3 single-quarter sales, management, R & D expense rates are 4.03% (year-on-year-0.23pct, month-on-0.47pct), 16.44% (year-on-year + 3.70pct, month-on-0.76pct), 16.31% (year-on-year + 3.26%, month-on-month + 1.19pct). It is estimated that Q4 expense rate control is still under some pressure.

The project continues to develop and take advantage of the trough of the industry to lay out new businesses.

The company's core business projects continued to develop, with 592 new small molecule CDMO projects signed in the first three quarters (compared with the same period last year), and the growth rate of Q3 newly signed projects increased. Q3 small molecule API project achieved income of 129 million yuan, a slight increase quarter by quarter, with the company's more process verification projects, further expansion of API products is expected.

With relatively abundant cash, the company continues to lay out new businesses in the trough of the industry. In the first three quarters, small molecule preparation CDMO achieved a total income of 61 million yuan (year-on-year + 237%), newly signed orders 144 million yuan (year-on-year + 211%); CGT CDMO achieved a total revenue of 32 million yuan (year-on-year + 85%), newly signed orders 58 million yuan (year-on-year-46%). The Biomacromolecule department was established during the year, with a revenue of 1.96 million yuan. Q3 single quarter company preparation, CGT, biological macromolecule CDMO business reduced the net profit of returning home nearly 50 million yuan.

Maintain the recommended rating. Considering the current innovative drug investment environment and the number of projects on hand, the EPS forecast from 2023 to 2025 is 0.87,0.76,1.14 yuan (the original 0.97,0.99,1.63 yuan). If the subsequent R & D demand of pharmaceutical companies picks up, the company's profit margin is expected to improve rapidly with the improvement of capacity utilization level. Maintain the recommended rating.

Risk tips: 1) if the proportion of global investment and outsourcing of innovative drugs is not as expected, the development of the industry will be affected; 2) the failed drug research and development project will be terminated ahead of time, or the sales after the drug market may not be as expected, which may lead to the failure to achieve the corresponding order volume; 3) production accidents, regulatory warning letters, etc., may lead to the loss of orders and even customers; and 4) exchange rate fluctuations may cause exchange losses.