Events:

The company released a report for the third quarter of 2023 that its operating income in the first three quarters of 2023 was 300 million yuan, up 17.89% from the same period last year; the net profit from returning to the mother was 38.63 million yuan, down 13.13% from the same period last year; and the net profit from non-return to home was 34.14 million yuan, down 14.45% from the same period last year. Of this total, 2023Q3 achieved operating income of 110 million yuan in a single quarter, up 6.09% from the same period last year; net profit from home was 17.06 million yuan, down 15.16% from the same period last year; and net profit from non-return was 16.25 million yuan, down 13.23% from the same period last year.

Revenue maintains restorative growth and continues to invest in new projects.

The company's performance is in line with expectations. The company's operating income achieved restorative growth in the first three quarters, and the return net profit decreased compared with the same period last year, which is mainly related to the company's increased business investment. The gross profit margin was 62.77%, down 2.71pct from the same period last year, mainly related to the company's increase in talent reserve and production capacity construction, resulting in a substantial increase in the cost side.

The sales expense rate was 24.33%, an increase of 24.81pct over the same period last year; the management expense rate was 11.62%, an increase of 11.08pct over the same period last year; the R & D expense rate was 11.79%, an increase of 38.14pct over the same period last year; and the financial expense rate was 0.50%, an increase of 323.29pct over the same period last year. The increase in the company's expense rate in the third quarter is mainly due to the continuous increase in R & D projects, active R & D activities and R & D personnel and salary increase.

The introduction of multi-allergen treatment drugs, Internet medical construction, enhanced testing and treatment combined with allergy affect 30% to 40% of the global population. The national prevalence rate of allergic rhinitis is about 17.6%. About 45.7 million of asthma patients over 20 years old are suffering from allergic rhinitis. Desensitization therapy is the only cause treatment for allergic symptoms. It is expected that the number of allergic patients in China will continue to increase with the process of urbanization, and there is a broad market for allergy treatment. The company's products Otok spray have been listed and sold in Hainan Lecheng Special Economic Zone, and prepare for domestic registration as soon as possible. The product adopts sublingual immunotherapy, and there are few competitive products in the market. Only our Dermatophagoides farinae drops are on sale in the sublingual treatment market in mainland China. The company also cooperates with Baidu, Inc. strategically to build a business model of offline sampling and online diagnosis and treatment, promote the construction of Internet + 's allergy prevention and control ecosystem, and strengthen the synergy of the detection and treatment industry.

Investment advice and profit Forecast

The company's allergy and self-immunity business maintained restorative growth, new project promotion and R & D investment increased, and profit margins decreased slightly compared with the same period last year. It is estimated that from 2023 to 2025, the company will achieve operating income of 4.09,5.19 and 636 million yuan respectively, and realize net profit of 0.52,0.68 and 83 million yuan respectively, corresponding to EPS of 0.82,1.08 and 1.32 yuan per share respectively, and corresponding PE of 48,36 and 30 times respectively, maintaining the "buy" rating.

Risk hint

Research and development is not as expected, market competition intensifies, industry policy risk.