Performance: In 2023, we achieved revenue of 3.13 billion yuan (+22.9%), net profit of 80 million yuan (+116.6%) to mother, and net profit of 780 million yuan (+112.5%) after deducting non-net profit. Sales expenses amounted to 1,757 billion yuan, an increase of 24.73%; management expenses of 124 million yuan, a decrease of 6.39%; R&D expenses of 0.17 million yuan, a decrease of 80.31%, mainly due to the impact of the transfer of Russian vaccine project development expenses to cost processing last year.

Dividend plan: For the full year of 2023, it is planned to pay a cash dividend of 60.02% of net profit due to mother, with a total cash payment of 480 million yuan for the whole year. Cash of 7.37 yuan (tax included) for every 10 shares will be distributed to all shareholders, and 3 shares will be added for every 10 shares of the capital reserve.

Neoactive sales have maintained high growth, and there is still plenty of room: sales of 7.776 million units of Neoactive in 2023, with revenue of 2.82 billion yuan (accounting for 90%), an increase of 25.1% over the previous year. Neoactive successfully renewed health insurance in 2023. The negotiated price was 424.98 yuan (0.5mg/stick). The single hospitalization payment was no more than 3 days, a decrease of 4.5%, which is relatively moderate. Nordicom's current sales revenue was 907.5 million yuan, up 126.30% year on year; Imdo's current sales revenue was 129.5 million yuan, down 21.65% year on year. According to estimates in our report “Neoactive: Old Varieties, New Understanding - Discussion on Core Issues of Market Concern” released in 2023, there is still a lot of room for improvement. Based on an average of 4-5 doses of medication per hospital stay, the demand for neovactin use is estimated to be 2076-25.95 million. Currently, the penetration rate is low, and the product still has a lot of room for growth.

Negative risks have been released, and performance is expected to return to high growth. 1) The expansion of production capacity of neovactin is expected to reach 15 million units per year. In recent years, sales of the company's main product, neovactin, have continued to grow. In order to meet market demand, in 2021, the company began expansion of the new actin production line. It is estimated that after the expansion project is officially put into operation, the annual production capacity will reach 15 million units. The main construction, equipment commissioning, verification and trial production of the expanded production line have been completed, and it is currently in the pharmaceutical administration approval, inspection, and review stage; 2) Non-current items in 2023 had a significant impact on profits, including changes in fair value of Sri Lanka, which reduced net profit of 190 million yuan to the mother, and preparation for impairment of intangible assets of 190 million yuan. We expect the impact to be significantly reduced in subsequent years. 3) According to the company's annual report, in 2024, sales of the company's existing products will strive to achieve total revenue of 3.4 billion yuan, keep total costs within 2.4 billion yuan, and achieve a steady increase in net profit.

Profit forecast: We expect the company to continue to grow in the next 3 years. The operating revenue for 24-26 is 3.4.4\ 40.7\ 4.83 billion yuan, up 9.7%\ 18.4%\ 18.6% year on year, and net profit of 10.25\ 12.26\ 1,487 billion yuan, up 28%\ 19.6%\ 21.3% year on year; maintaining the “buy” rating.

Risk warning: risk of sales falling short of expectations, risk of policy risk, risk of changes in market pattern