Incidents:

The company released its report for the first quarter of 2024. 2024Q1 achieved revenue and net profit to mother of 2,835 million yuan and 416 million yuan respectively, up 2.26% and 11.00% year-on-year respectively.

The steady development of the infusion sector promoted the steady growth of the company's 2024Q1 performance:

2024Q1 achieved revenue and net profit to mother of 2,835 million yuan and 416 million yuan respectively, up 2.26% and 11.00% year-on-year respectively. Thanks to the recovery in demand for infusions after the pandemic, 2024Q1 achieved steady growth in performance.

Thanks to the recovery in infusion usage and the volume of new products released after launch, the company's infusion business is expected to continue to develop steadily:

The recovery in infusion usage and the stable release of core varieties are expected to drive the steady development of the company's infusion sector. Among them, in terms of infusion usage, hospital terminal diagnosis and treatment volume gradually recovered after the epidemic, which is expected to drive an increase in the usage of large infusion terminals; in terms of new products, the company is actively expanding nutritional and therapeutic products, and varieties such as propofol medium/long chain fat emulsion injections and levofloxacin sodium chloride injections are expected to stabilize.

Merger and acquisition of Zizhu Pharmaceutical to strengthen the business layout in the field of women's health medication:

Zizhu Pharmaceutical is a leading pharmaceutical company for women's health use in China. The product pipeline includes varieties such as mifepristone, levonorgestrel, levonorgestrel, and pregntrienone. The company's merger and acquisition of Zizhu Pharmaceutical is expected to enhance its business layout in the field of female health medication.

Investment advice:

The company's net profit from 2024 to 2026 is estimated to be 1,480 billion yuan, 1,639 billion yuan, and 1,804 billion yuan, respectively, up 11.0%, 10.8%, and 10.1% year-on-year; EPS in 2024 is expected to be 1.42 yuan/share, giving it 19 times the current PE, corresponding to a 6-month target price of 26.98 yuan/share, providing initial coverage and a buy-A investment rating.

Risk warning: risk of drug price reduction; sales of core products falling short of expectations; risk of worsening competitive pattern of core products; risk of R&D progress falling short of expectations, etc.