Overview of events

The company released the third quarter report of 2023: the company realized operating income of 581 million yuan (+ 1.34%), net profit of 142 million yuan (+ 11.53%) and non-return net profit of 131 million yuan (+ 9.92%) in the first three quarters of 2023. The company's 2023Q3 realized operating income of 176 million yuan (- 11.40%), net profit of 33 million yuan (- 33.94%), and non-return net profit of 30 million yuan (- 34.23%).

Macro consumption affects the growth rate of bisexual drug use, and the upgrading of gastrointestinal drug production line affects performance.

Affected by the weak overall domestic consumption, the sales income of gender health drugs reached 201 million yuan (+ 18.96%) in the first three quarters of 2023, with a slower growth rate. Affected by the upgrading and transformation of the production line of "Hewei Zhengchang pills" in Thailand, gastrointestinal medication was stopped in September, resulting in lower sales revenue than expected. In the future, with the completion of the transformation of the production line and the promotion of domestic independent production, the products are expected to become a well-known brand in the field of acute gastrointestinal drugs in China.

According to the announcement, the company invested 62 million yuan (+ 85.80%) in R & D in the first three quarters of 2023 according to the announcement. The innovative drug CKBA ointment was successfully approved to carry out phase II clinical trials of vitiligo indications in July this year, and the company said it strives to complete the first patient in the group as soon as possible. Sildenafil oral disintegrating tablets were accepted by the State Drug Administration in March 2023. Finasteride tarafel capsules for male benign prostatic hyperplasia under study are expected to apply for NDA at the end of 2023, and minoxidil topical solution for hair loss is expected to apply for NDA; for adult presbyopia eye drops project by the end of 2023. At present, the preclinical work has been basically completed, and the application for clinical trials will be submitted to the National Drug Review Center as soon as the relevant application materials are complete. We believe that the company will actively layout new business growth points and continue to enrich the company's product pipeline, which will provide a guarantee for sustained performance growth in the future.

Investment suggestion

Adjust the company's profit forecast for 2023-2025: it is estimated that the company's operating income in 2023-2025 will be 1.121 billion yuan, respectively (the previous value is 1.344 billion yuan), and the EPS in 2023-2025 will be 0.48 pound 0.69 pound 0.89 yuan, respectively, corresponding to 17.75 yuan per share on October 27, 2023. From 2023 to 2025, the PE was 370.26Universe 20X respectively, maintaining a "buy" rating.

Risk hint

The risk that the effect of product promotion and research and development is not as expected, the progress of new drug listing and the market performance after listing are not as expected; the risk of agency business operation; the risk aggravated by market competition