Event: on October 30, 2023, Tonghua Dongbao released the third quarter report of 2023. In the third quarter of 2023, the company achieved operating income of 725 million yuan, an increase of 1.92% over the same period last year. The company realized a net profit of 275 million yuan belonging to shareholders of listed companies, an increase of 25.04% over the same period last year, and a net profit of 277 million yuan after deducting non-recurring gains and losses belonging to shareholders of listed companies, an increase of 26.19% over the same period last year.
Company performance: in the first three quarters of 2023, the company achieved operating income of 2.091 billion yuan, down 0.36% from the same period last year. The company realized a net profit of 760 million yuan belonging to shareholders of listed companies, down 45.81% from the same period last year, mainly because of an investment income of 912 million yuan in the same period last year. The net profit belonging to shareholders of listed companies after deducting non-recurring profits and losses was 757 million yuan, an increase of 14.54% over the same period last year.
The second-generation insulin sales stabilized, and the third-generation insulin released rapidly. The special collection of insulin was officially launched in May 2022. Despite the decline in product prices and other factors, the company expanded its market share by continuously strengthening channel promotion. During the reporting period, the company's insulin sales stabilized, and the sales of insulin analogue products maintained rapid growth, driving the non-homing net profit to increase by 25% in the third quarter compared with the same period last year. Insulin analogues accounted for more than 20% of total revenue in the first three quarters. Compared with the same period in 2021, the increase is more than 10 percentage points.
Innovate the strategic layout of transformation, and gradually realize the results of research and development. The company is progressing smoothly in R & D and innovation, actively laying out hot targets such as GLP-1RA and URAT1 with great market potential. The oral small molecule GLP-1RA application of a class of new drugs was accepted in August 2023; the German phase I clinical trial of soluble glycyrrhizin double insulin injection reached the main end point in October, which provided a reliable basis for follow-up clinical trials; the clinical phase IIa trial of a new drug, such as gout, has been completed and database locking has been completed. It is expected to become a XO/URAT1 inhibitor in gout field First-in-class. Phase I clinical trial has completed the last case out of the group. In addition, three products have been approved or are about to be approved for listing, and GLP-1RA Lilarutide injection is expected to be approved for listing within this year, and the company will become the second domestic listed company; Englerjing and its APIs were approved for listing in October this year, and were accepted in September this year relying on the application for production of Cauxie tablets.
The internationalization strategy is advancing steadily, and the products going out to sea can be expected in the future. During the reporting period, the company signed a strategic agreement with Jianyou shares on the entry of glargine, Mendong and Laiju insulin injections into the US insulin market, and the company and Jianyou shares will jointly carry out the development and production of the above three types of insulin in accordance with the US FDA drug registration requirements, while Jianyou shares will obtain the exclusive commercial rights and interests in the sale of the above three types of insulin in the United States.
Investment suggestion: we estimate that the company's return net profit from 2023 to 2025 will be 1.3221523 billion yuan respectively, corresponding to PE in 19-16-15, maintaining the "recommended" rating.
Risk hints: collection risk; industry policy risk; product research and development is less than expected risk; market competition intensifies risk; production capacity release sales growth can not hedge with collection price reduction risk.