Event: The company released the third quarterly report of 2023, realizing operating income of RMB 2.09 billion yuan (-0.4%), net profit attributable to shareholders of parent company of RMB 760 million yuan (-45.8%), net profit attributable to shareholders of listed company excluding non-recurring profits and losses of RMB 760 million yuan (+14.5%). In the third quarter, it realized operating income of 730 million yuan (+1.9%), net profit attributable to shareholders of parent company of 280 million yuan (+25%), net profit attributable to shareholders of listed company excluding non-recurring profits and losses of 280 million yuan (+26.2%).
The results grew steadily and the profit margin improved steadily. In the first three quarters of 2023, the Company's performance maintained steady growth, with gross profit margin of 78.8%(+0.3pp); net interest rate after deduction of non-profit was 36.2%(+4.7pp), and profit margin increased steadily. The expense ratio is well controlled, with R & D expense ratio of 3.15%(-2.2pp), sales expense ratio of 30.3%(-2.4pp) and administrative expense ratio of 5.7%(-0.7pp).
Strategic cooperation with Jianyou shares to enter the US insulin market. According to the agreement, Tonghua Dongbao and Jianyou shares will jointly develop and produce the above three insulin cooperative products according to the drug registration requirements of FDA, and Jianyou shares will obtain exclusive commercialization rights in the US market after the products are launched. The Phase III clinical trial of insulin human registration in EU of the Company has been completed in 2022, the marketing application has been formally accepted, the registration preparation and application of insulin analogues in several developing countries have been steadily advanced, and insulin sailing is expected to contribute to performance increment in 2024.
Continue to accelerate the process of internationalization and steadily promote the overseas registration of various products. The company insulin glargine has carried out the preparation and application of registration materials in a number of developing countries, and has completed the preliminary preparations for the registration application of insulin in developing countries. In addition, the company's application for listing permission for insulin injection has been formally accepted by the European Drug Administration; in terms of Lilaluptide injection, the company will work with Sinopec Pharmaceuticals to explore 17 overseas emerging markets.
The innovative pipeline is about to be realized, bringing new growth points for the company. The company started insulin analogue research in 2011, and now glargine insulin injection, asparagus insulin and premixed preparations have been approved on the market; GLP-1RA Lilaluptide injection applied for market in June 2022 and is expected to be approved within this year; URAT1 inhibitors are in phase II clinical phase. The company is rich in innovative pipeline reserves, which will inject a strong driving force for the company's continued growth in the future.
Profit forecast and investment suggestion: the company is a leading domestic insulin enterprise, the centralized procurement disturbance is basically cleared, the new products are listed in quantity for six times, and the internationalization strategy is also steadily promoted. We expect a compound revenue growth rate of 12.8% over the next three years and maintain a "buy" rating.
Risk hints: industry policy risk, R & D less than expected risk, product commercialization less than expected risk and so on.