Hospital-side entry acceleration+new products entering the release cycle. The company is expected to double in valuation and performance. The risk of collecting current stock products has basically been cleared. With policy support from accelerated hospital-side entry in '24 (nearly 20 provinces have issued documents requiring medical institutions to hold pharmaceutical meetings within 1-3 months to accelerate the entry of new drugs), controlled narcotics products are expected to enter a long cycle of rapid dosage (we expect the total revenue growth rate of the 4 controlled narcotics models to exceed 50% in 24), and the superimposed innovation pipeline will be realized one after another (innovative drugs that have already been marketed:

Oxelidine fumarate+ deuterphenazine; an innovative drug that is expected to be marketed in the next 2-3 years:

(NHL60001+NHL35700), the valuation is expected to be reshaped. We expect the company's net profit to grow by 20% + starting in '24 and continue to accelerate, maintaining EPS of 1.24/1.51/1.88 yuan in 24-26. The segmented valuation method gives a target price of 37.01 yuan (previous value of 30.94 yuan) to maintain a “buy” rating.

Medium- and short-term growth points: Stock collection risks have basically been clarified, and liberalization of admission drives rapid release of narcotics 1) Collection risks have been basically cleared: most of the company's large varieties with sales exceeding 100 million yuan have been included in national collection, and the pattern of the remaining uncollected varieties is relatively good (most products only have revenue of tens of millions to a few hundred million yuan; large-scale midazolam is a class II semi-psychoactive control product, and etomide is an exclusive long-chain dosage form, none of which meet national collection conditions); 2) Controlled rapid release of anesthesia: The companies, respectively, released on 12/21/20 Approved sufentanil/oxycodone in November 21/ Alfentanil, combined with remifentanil, which was approved in October '14, we estimate that the total sales of the 4 controlled anaesthesia models will be 440 million yuan in 22 years, 23 to 800 million yuan. We are expected to achieve 50% + growth and enter the dosage cycle in 24 against the backdrop of accelerated hospital admissions.

Long-term growth points: The R&D echelon has been perfected, and the second growth curve has gradually built a rich R&D pipeline through self-development+mergers and acquisitions: 1) Anesthetic analgesia: oxelidine fumarate (TRV130, μopiates, post-operative analgesia) was approved for marketing in May 23, included in national health insurance by the end of 23, we expect a peak of 2.0+ billion yuan; NHL60001 emulsion injections (etomide modified) will soon enter phase 3 clinical trials; 2) Spirit: NHL35700 tablets (antisperm) phase 2 clinical trials are expected to be approved in 27, peak value ~ 1 billion Yuan; NH112 (anti-sperm, phase 1 clinical); NH102 (antidepressant, phase 1 clinical); 3) Neurology: Obtaining exclusive commercial rights in mainland China for 24-28 years in February '24 (Class 1 new drug used to treat Huntington's disease and tardive dyskinesia, included in national health insurance at the end of 2020), we expect peak sales of 10+ billion yuan.

The reasonable market value under the SOTP valuation method is $37.3 billion

1) Traditional business: We expect the company's net profit to be 1.25 billion yuan in 24 years. Referring to comparable companies, we will give the innovative drug sector a valuation of 23 billion yuan (comparable company Wind unanimously expects 18x, and the company is the leader in the refined hemp industry and gives a premium), corresponding to a market value of 28.7 billion yuan; 2) Innovative business: Considering the continuous implementation of the company's innovative products, we use the DCF valuation method (we only measure the marketed oselidine fumarate and deuterphenazine tablets, and NHL 35700 tablets in phase 2 clinical trials) to give the innovative drug sector a valuation of 8.6 billion yuan.

In summary, the reasonable market value of the company under the SOTP valuation method is 37.3 billion yuan.

Risk warning: There is a risk that sales of core products purchased in volume will decline, and product development will fall short of expectations.