The company publishes three quarterly reports for 2023. In the first three quarters, the company realized income of 1.105 billion yuan, year-on-year + 10.02%, net profit of 182 million yuan, year-on-year-10.11%, non-return net profit of 177 million yuan, year-on-year-14.44%. In a single quarter, 2023Q3 achieved revenue of 419 million yuan, + 3.89% year-on-year, and net profit of 95 million yuan, + 15.05% compared with the same period last year. Realized deduction of non-return net profit of 92 million yuan, + 16.70% over the same period last year.

The performance is in line with expectations, and the financial indicators are continuously optimized. 2023Q3's home net profit and non-home net profit increased by 15.05% and 16.70% respectively compared with the same period last year, which is in line with market expectations. 2023Q3's gross profit margin and net profit margin were 79.58% and 22.55% respectively, compared with the same period last year-0.99pct and + 2.19pct, respectively, the net profit margin increased significantly, and the decline in gross profit margin is expected to be mainly due to changes in the income structure of the company's gel and eye drops. From the cost side, the sales expense rate, management expense rate (including R & D) and financial expense rate are 33.09%, 20.32% and-0.34% respectively, compared with the same period last year-1.75pct,-1.25pct, + 0.12pct, respectively, the overall cost control is optimized.

The progress of approval of large items is expected to exceed expectations. On September 27, according to CDE information, the company's atropine sulfate NDA (CXHS2300047) entered the data replenishment stage. On October 16, the compliance procedure was completed, and the remaining five materials were queued for review normally, and market doubts need to be dispelled. With the rapid progress of atropine review, large products are expected to continue to attract market attention: 1) on April 25, atropine eye drops NDA of Xingqi Eye Drops was accepted by the Drug Review Center, and on May 27, it was formally included in the priority review and approval. On September 13 / 14, NDA completed the evaluation of compliance, pharmacology and toxicology, clinical, clinical pharmacology, pharmacy and statistics. The six lights were completely off and the progress bar exceeded expectations. 2) since the completion of the progress bar of the new report, the market has been partially approved. According to the current speed of progress, atropine is more likely to be approved than expected, which is expected to promote the continuous interpretation of the market.

Investment logic re-combing: 1) the company is a leading ophthalmic drug company, its cyclosporine eye drops gradually release volume, gel plate sales pick up, with a good foundation for development. 2) large single atropine eye drops is a key drug in the field of myopia, the original Internet sales foundation is good, the progress of listing review is ahead of schedule, and it is expected to have a market monopoly period of 1-2 years after approval, which will bring greater performance flexibility for the company.

Profit forecast: due to the limited Internet sales channels, the company's sales of atropine as a hospital preparation so far this year are lower than expected, lowering the company's profit forecast. It is estimated that the company's net profit from 2023 to 2025 will be 261 million yuan, 353 million yuan and 480 million yuan respectively, with a growth rate of 23.1%, 35.5% and 36.0%, respectively, and the corresponding PE will be 77x, 57x and 42x, respectively. Maintain a "buy" rating.

Risk tips: core product promotion is not as expected; ophthalmology drug market competition intensifies; new drug research and development risk.