Key features of Kenkai Technology: We believe that the company has three distinct attributes: scarcity, quality and growth. First, the requirements for polyethylene glycol for medical use are very high, and the production of high-purity materials has extremely high barriers. China has relied on imports for a long time. In 2001, Jiankai Technology filled a long-term domestic production gap in this field, and the purity of the polyethylene glycol it produces can exceed 99%. Based on the solid foundation of its material platform, Jiankai Technology has been providing polyethylene glycol derivatives since 2008, and has actively promoted the construction of innovative platforms to provide rapid customization of derivatives and related technical services. Based on the innovation platform, the company further explores the commercial value of its proprietary technology and independently develops polyethylene glycolated pharmaceuticals and medical devices.

Focusing on polyethylene glycol materials, Jiankai Technology has gradually achieved a three-level jump in value. From the establishment of Tianjin Jiankai to produce high-purity, low-dispersion PEG derivatives, to the establishment of Liaoning Jiankai to enhance the production capacity of PEG raw materials at the source, to the establishment of a R&D entity, the Liaoning Jiankai Innovation Research Institute to help innovate and upgrade, the company is progressing steadily and steadily. Scarce custom development capabilities give the company an advantageous position in sales competition, and pharmaceutical device development capabilities are expected to drive the company's performance to the next level. Currently, the company has 140 global patents, currently supports more than 40 overseas research projects, and has more than 30 domestic R&D customers, accounting for 2/3 of all domestic clinical research enterprises; it also supplies 13 commercial products.

PEG for medical use has a wide range of applications, and the sky is high enough for birds to fly. Polyethylene glycol has excellent properties and has extremely high application potential in the field of pharmaceutical devices. Polyethylene glycolylated drugs are still a hot topic of research and development, but application fields have spread from protein modification, specifically to fields such as small molecule modification drugs, nucleic acid drug delivery systems, and medical devices and connectors. According to Allied Market Research's report, the global scale of polyethylene glycol modification drugs will reach 17.8 billion US dollars in 2025.

The strength of the innovation platform is about to be tested, and the research and development of self-developed polyethylene glycol chemical devices is progressing smoothly. Based on its deep understanding of PEG, the company actively explores downstream and promotes the expansion of PEG application fields through its own research and demonstration.

Polyethylene glycol irinotecan: the summary report of the phase 2 clinical trial for small cell lung cancer indications has been completed, and the implementation of the phase 3 clinical trial is being prepared; phase 2 clinical trials for glioma indications are ongoing.

JK-2122H: Polyethylene glycol cross-links to sodium hyaluronate to increase degradation time and reduce toxic side effects.

At present, all subjects have been enrolled and have entered a six-month follow-up period. Clinical trials are expected to be completed by the end of 2023.

Profit forecast and investment rating: The company is a high-quality polyethylene glycol CXO that is scarce in the world. It will maintain its high short-term performance growth and long-term leading position in the industry by collaborating through the “Materials+Innovation” platforms. Revenue is expected to increase significantly in the next two years: domestic Tebao and Shuanglu's G-CSF projects have been approved for listing, Anke growth hormone drugs are being declared, and 3 drugs, including Tebao BioGrowth Hormone, are in phase 3 clinical trials; overseas Ushibi's 1 billion US dollar C5 complement inhibitors have been approved for sale, and 2 more products have entered phase 3 clinical trials. We expect the company's net profit from 2023-2025 to be 1.66, 2.06, and 271 million yuan respectively, corresponding to PE of 45.6, 36.6, and 27.9, respectively. If the research and development of new drugs under development progresses smoothly, it is expected to contribute considerable milestone revenue, and the company's performance is highly elastic. Combining the company's rapid growth characteristics, we are optimistic about the company's development, covering it for the first time, and giving it a “buy” rating.

Risk warning: risk of core technology iteration; risk of product price reduction; risk of product development falling short of expectations.