Incident: The company announced its 2023 annual report. In 2023, it achieved operating income of 14.566 billion yuan, an increase of 15.35% over the previous year; realized net profit of 4.532 billion yuan, an increase of 9.47% over the previous year. Looking at Q4 alone, the company achieved revenue of 3.884 billion yuan in Q4 of 2023, an increase of 30.30% over the previous year, and achieved net profit of 920 million yuan to mother, an increase of 36.12% over the previous year.

The expense ratio has declined, and the net interest rate is relatively stable. The company's management expense ratio in 2023 was 6.6%, the same as the previous year; the sales expense ratio was 27.3%, a year-on-year decrease of 2.9 pct; the R&D expense ratio was 11.8%, up 1.1 pct year on year, and financial expenses were -0.8%, the same as the previous year. The company's gross margin in 2023 was 86%, down 2pct year over year. The company's net profit margin in 2023 was 32.8%, down 0.6 pct year over year.

The performance was in line with expectations, and the performance of all sectors was steady. Looking at the whole year, the subsidiary Jinsai Pharmaceutical achieved revenue of 11.084 billion yuan, up 8.48% year on year; achieved net profit of 4.514 billion yuan, up 7.04% year on year; Baike Biotech achieved revenue of 1,825 million yuan, up 70.30% year on year; realized net profit of 501 million yuan, up 175.98% year on year; subsidiary Huakang Pharmaceutical achieved revenue of 703 million yuan, up 6.73% year on year; achieved net profit of 0.37 million yuan, up 18.47% year on year; subsidiary Gaoxin Real Estate achieved revenue of 915 million yuan, year over year Increased by 13.71%; realized net profit of 74 million yuan, an increase of 16.25% over the previous year.

The company adheres to a differentiated R&D strategy and continues to promote the launch of new products. In 2023, multiple product regulations of the company's growth hormone products added indications related to growth disorder in pre-adolescent children caused by chronic kidney disease (CKD); long-term growth hormone was approved to increase the supplier of methoxy polyethylene glycol derivatives (PEG), the raw material used by Jinpaige Pharmaceutical Co., Ltd. to produce the product's stock solution, which is conducive to raw material supply guarantee and cost optimization; the live attenuated herpes zoster vaccine was approved for sale, further enriching the company's vaccine product line; the co-introduced surface narcotics riprodicaine cream and used to treat mild and moderate symptoms of Alzheimer's disease Liss's Clear transdermal patch (twice a week) was approved for marketing.

Maintain an “Overweight” rating. EPS is expected to be 12.51/14.08/15.59 yuan in the next three years. Considering the company's rich research pipeline, actively promoting the launch of new products, and maintaining the “gain” rating.

Risk warning: risk of policy change, risk of new drug development, risk of talent integration