Event: the company announced the third quarterly report of 2023, the company's revenue in the first three quarters of 2023 was 929 million yuan, the net profit of yoy12.25%, was 179 million yuan, the revenue of yoy39.48%; was 311 million yuan in the third quarter alone, and the net profit of yoy-0.92%, was 63 million yuan, yoy22.82%.

Steady growth in income and outstanding performance of pet products. In the first three quarters, the company achieved an operating income of 929 million yuan, an increase of 12.25% over the same period last year, of which pig biological products, poultry vaccines and antibodies, chemicals and pet functional health products increased by 8.89%, 10.03%, 19.69% and 322% respectively compared with the same period last year. Judging from the performance in the third quarter alone, the company's operating income was basically the same as that in the same period last year, and the year-on-year changes in pig vaccines, poultry vaccines, antibodies and chemicals were-3.9%, 9.6% and-5.3%, respectively. We judge that the demand for live pig products is under pressure due to low downstream farming prices, and revenue has declined to a certain extent.

Deepen the marketing of "big customers" and "big items", and increase the performance of cost optimization. The company continues to implement the marketing strategy of "big customers" and "large items", and continues to optimize cost management. under the pressure of the industry, the company's sales gross profit margin in the first three quarters decreased by only 1.26 percentage points compared with the same period last year. Net sales margin increased by 3.2 percentage points. From the point of view of the specific separation of the cost side, the rate of sales expenses / management expenses / R & D expenses / financial expenses varies from-1.70% to 1.60% and 0.86% to-0.04% respectively. In addition to ensuring continuous R & D investment, the company optimizes cost management and control in an all-round way, driving the company's profits to maintain high growth.

The research and development of new products continues to advance, and the pet field continues to be distributed. The African classical swine fever subunit vaccine project developed by the company in cooperation with Lanju Research is in the process of emergency evaluation. African classical swine fever vaccine, as a large item expected by the industry, is expected to significantly increase the company's revenue performance after the product is listed. The live pseudorabies vaccine independently developed by the company is about to enter the new veterinary drug registration review stage, pig round branch double inactivated vaccine and poultry Wulian inactivated vaccine are currently in the new veterinary drug registration stage, the company's continuous R & D innovation and new product landing will become the core driving force of future development. In addition, the company actively laid out and integrated pet sector resources. During the reporting period, the company announced plans to purchase 100% equity in Lejong Health and Hip Pet Network, integrate pet medicine and health product resources, and promote business coordination in pet sector. the pet sector is expected to continue to contribute significantly in the future.

Company profit forecast and investment rating: we are optimistic about the continuous landing of new products driven by the company's R & D, the improvement of the proportion of large customers to promote the steady growth of the company's operation, and the improvement of profitability brought about by excellent cost control. It is estimated that the 23-25 return net profit of the company is 2.70,3.29 and 415 million yuan respectively, EPS is 0.77,0.93 and 1.18 yuan, PE is 25,21 and 16 times, maintaining the "recommended" rating.

Risk hint: the progress of new product research and development is not as expected, vaccine sales are not as expected, etc.