Another good result was achieved under the high base, with the target price of 25.74 yuan, maintaining the “purchase” of Huarun Shuanghe 1Q24 with revenue of 2.84 billion yuan (+2.3% yoy), net profit to mother of 420 million yuan (+11.0% yoy), and double-digit profit growth under the high base. The main reasons: 1) The demand market for Daxin 1Q was relatively good, and high-profit varieties such as vertical soft bags accelerated market introduction; 2) Some products in the chronic disease sector won the regional bid again, and specialized nephrology varieties such as nephrology Accelerated release. Looking ahead to 2024, considering the optimization of the structure of infusion products and the expansion of the non-standard market in the chronic disease/specialist sector, we are optimistic that the company's profit will hit double-digit year-on-year growth in 2024. We expect the company's 2024-2026 EPS to be 1.43/1.59/1.75 yuan (endogenous only), give it 18 times PE in 2024 (same as its A-share comparable company Wind), target price 25.74 yuan, and maintain a “buy”.

Infusion sector: 1Q24 is in strong demand. The 1Q24 revenue of BFS/Direct Soft and other driving volume companies was 901 million yuan (+3.96% yoy). The main reasons: 1) the 1Q demand side for large infusions is strong; 2) BFS/upright soft bags are speeding up the replacement and market introduction of low-end packaging materials. Looking ahead to 2024, we are optimistic that the revenue of the infusion sector will increase by more than 5% year-on-year under a high base. The main reasons: 1) the company continues to expand and integrate large infusion capacity (such as plant relocation in Anhui + improving the level of automation); 2) the company's nutritional and therapeutic infusions are expected to continue to increase (we estimate that 1Q24 accounts for more than 20%); 3) key varieties such as ambroxol and pediatric amino acids will grow steadily. New products (propofol medium and long chain fat milk, moxifloxacin hydrochloride injection, sodium levofloxacin injection, etc.)) Drive revenue growth.

Non-infusion sector: Some varieties of chronic diseases won the bid again. Strong revenue in the field of specialty nephrology and oncology was 1.91 billion yuan (+2.2% yoy), of which: 1) 1Q24 revenue in the chronic disease sector was 800 million yuan (+1.9% yoy), benefiting from steady growth in regional collection (Shanghai, Zhejiang, etc.) +antihypertensive 0. We expect the revenue of the specialty sector to grow steadily in 1Q24 (revenue 400 million, +11% yoy), of which Leading in the field of medicine and oncology (teniabidiol, etc.) Growth. We are optimistic that revenue will maintain single-digit growth within 24 years (benefiting from pediatric colacosamide, nephrological abdominal penetration, pregabalin and new oncology products); 3) 1Q24 revenue from APIs (mainly Shenzhou Biocoenzyme Q10/Tiandong Heparin, etc.) fell 8% year on year to 340 million yuan, mainly due to falling core product prices and reduced export orders, and the sector's revenue scale is expected to stabilize during the year.

Self-research focuses on innovative platforms and technology. When Zizhu mergers and acquisitions are carried out, we are optimistic that the company's self-research and epitaxial will go hand in hand: 1) the self-development aspect focuses on small molecule innovation targets (Fascin protein targets and BePro prodrug platforms) and lays out 5 core technology platforms (microsphere/pediatric drugs/multi-chamber bags/innovative crystal/continuous flow); 2) On the epitaxial side, the company announced the acquisition of 100% of Zizhu Pharmaceutical's shares in February, and is optimistic about subsequent mergers and acquisitions to drive up the company's profit (Zizhu 81-M23 revenue/profit of 706 million yuan, respectively)) to achieve long-term use in gynecology Field collaboration. We are optimistic that during the “14th Five-Year Plan” period, the company will accelerate its significant development in the field of expertise and innovation.

Risk warning: The recovery of large infusions fell short of expectations, the price reduction of collected varieties exceeded expectations, the risk of product development failure, and BD cooperation fell short of expectations.