Incidents:
Tonghua Dongbao released its 2023 three-quarter report on October 30, 2023: in 2023, Q3 achieved revenue of 725 million yuan, an increase of 1.92% over the previous year; realized net profit of 275 million yuan, an increase of 25.04% over the previous year; and achieved net profit of 277 million yuan, an increase of 26.19% over the previous year.
Investment highlights:
The product layout is rich, and we are actively exploring new fields. The company's existing products and pipeline products under development have a rich and comprehensive layout in the field of diabetes treatment, covering various products such as long-acting, medium-acting, quick-acting, and ultra-fast-acting insulin, double insulin compound preparations, GLP-1RA, long-acting GLP-1RA, insulin analogue GLP-1RA compound preparations, and multi-target innovative drugs. As of 2023 H1, the company is actively expanding into the field of treatment of metabolic endocrine diseases, and is developing two new class 1 drugs and one chemical oral drug in the field of gout/hyperuricemia treatment.
Actively carry out academic exchange activities to strengthen brand loyalty. The company continues to strengthen exchanges with experts at the provincial and municipal levels through the Bethune project and academic activities of various foundations, and has opened up academic communication channels between the province, city (county), grassroots level (township, community) and the top three hospitals. Through specialized academic exchanges, public welfare activities and brand promotion, the core information of the company's products is conveyed, the concept of medication for chronic diseases is promoted, and doctors' and patients' awareness of the company's products and the company's brand image are further enhanced. At the same time, it is also paving the way for market development for other products that will soon be marketed.
Earnings forecasts and investment ratings. We expect the company's operating income in 2023-2025 to be 29.07, 34.10, and 3.824 billion yuan, and net profit of 10.21, 11.53, and 1,293 billion yuan, corresponding PE of 22.04x, 19.52x, and 17.40x. As the company continues to focus on its core business, its innovative strength is gradually strengthened, and its product coverage is gradually comprehensive, and the drive for endogenous growth has been continuously strengthened, coverage for the first time, and given a “buy” rating.
Risk warning. There is a risk of price reduction in collection, new product release falling short of expectations, R&D progress falling short of expectations, sales in the European and American markets falling short of expectations, and risk of industry policy changes.