Event: On December 25, 2023, Jiuqiang Biotech held the fourth meeting of the 5th board of directors: 1) deliberated and passed the “Proposal on the Company's Strategic Development Plan” to determine the strategic ideas for vigorously developing pathological diagnosis services while developing biochemical diagnosis; 2) reviewed and passed the “bill on the reform of the company's business division system” to establish a testing department, pathology department, strategic development department, academic support department, board office, finance department, audit department, and general administration department; 3) reviewed and passed the “bill on the appointment of senior management of the company”, appointing Lin Qixin and Yang Qinghai Mr. is the company's deputy general manager.

Clarify strategic ideas and consolidate the position of leader in the biochemical and pathology industry: In order to cope with industry changes, the company has determined strategic ideas for vigorously developing pathological diagnosis business while developing biochemical diagnosis. In the field of testing, while consolidating its leading position in biochemical diagnosis, the company complements the R&D and manufacturing business of immunological diagnosis and various types of testing instruments, and vigorously develops blood coagulation testing business. It also actively searches for and lays out emerging testing fields through a combination of enterprise cooperation, investment, mergers and acquisitions, and independent research and development to build innovative companies in the testing field; in the field of pathology, continuously improve the vertical industry chain, increase research and self-production of upstream raw materials, comprehensively promote the upgrading and optimization of fully automatic pathological dyeing systems, and at the same time adapt to the trend of intelligent pathology testing under the new situation, build an international smart pathology platform enterprise, and consolidate its position as a leader in the pathology industry.

Implement division system reforms to ensure the company's sustainable and steady development: To help the company's strategic development, the company will carry out division reforms and set up departments such as testing division, pathology department, strategic development department, and academic support department. Among them: the Laboratory Division and the Pathology Division are responsible for routine business matters in the company's testing sector and pathology sector, formulating strategic plans according to development needs, and achieving strategic goals around the expansion of testing and pathology fields; the Strategic Development Department assists in the development of testing and pathological diagnosis, and seeks new development opportunities in product expansion, corporate mergers and acquisitions; the Academic Support Department leverages the Group's professional capabilities and integrates industry resources to support the business development of various divisions, including academic cooperation, sales support, and government affairs. This division reform will help develop the testing and pathology business sectors, achieve resource sharing between sectors, further consolidate the leading position in the IVD field, and ensure the company's sustainable and steady development.

Seize Sinopharm's empowerment opportunities and open the ceiling for long-term growth: The “Proposal on the Company's Strategic Development Plan” clearly emphasizes that the company will focus on Sinopharm Group's strategic opportunities to build an IVD industrial platform, give full play to the advantages of listed companies, and gradually lay out fields with large development space, strong market demand, and good synergy by combining endogenous development and epitaxial mergers and acquisitions on the basis of vigorous development of immunohistochemistry. This strategic plan further clarifies Sinopharm's strategic position on the company's IVD industry platform. We are optimistic about Sinopharm's channel collaboration for the company's endogenous development and related empowerment of mergers and acquisitions for external development, opening up a ceiling for the company's long-term growth.

Profit forecast, valuation and rating: We are optimistic about the progress of the company's new strategic development plan and the continued empowerment of Sinopharm. We maintain the 2023-2025 net profit forecast of 522/6.73/834 million yuan, and the current price corresponding to 23-25 PE is 23/17/14 times, maintaining the company's “buy” rating.

Risk warning: Risk of price reduction exceeding expectations, risk of changes in sales models, risk of new product development and listing progress falling short of expectations, and risk of stock price instability due to irregularities.