2023 performance: On April 28, 2023, the company released its 2023 annual report. In 2023, the company achieved operating income of 1,280 billion yuan, a year-on-year decrease of 2.46%; realized net profit of 45.6 million yuan, an increase of 8.67% over the previous year.

Results for the first quarter of 2024: On April 28, 2024, the company released its 2024 quarterly report. During the reporting period, the company achieved operating income of 244 million yuan, a year-on-year decrease of 27.00%, and realized net profit of 3.07 million yuan, a year-on-year decrease of 80.00%.

A leader in the steroidal API segment, striving to create a complete industrial chain layout. The intermediates field covers five major series of steroidal raw materials: androstenedione (AD), androstenedione (ADD), 9-hydroxyandrostenedione (9OH-AD), 17α-hydroxyprogesterone derivatives (A ring), and dibutanol (BA), and has the most complete product line in the field of steroidal pharmaceutical raw materials in China. In the field of APIs, the company chose to use the field of high-end respiratory specialty APIs as a breakthrough to upgrade the industry. It has now obtained production licenses for 9 types of APIs, including fluticasone propionate, triamcinide, and budesonide, and has large-scale production capacity. Currently, four APIs, including desonide and budesonide, are being individually reviewed, and fluticasone propionate APIs are being reviewed in connection with downstream pharmaceutical companies. In the pharmaceutical field, the first phase of civil engineering for the domestic formulation plant has been completed, and production and distribution equipment is being ordered and installed according to the plan. Lisapharma's overseas subsidiary Lisapharma sells more than 20 pharmaceutical products, including triamcinide injections, glutathione (sterile powder and water solution for injection), sucralfate aluminum gel, methylprednisolone sodium succinate (sterile powder and water solution for injection), calcitonin injections, amikacin (ointment, injections), and atracuronium injections. At the same time, the company has completed the import registration process for triamcinolone injections and salmon calcitonin injections, and has begun domestic sales.

Integrate epitaxial acquisition companies to enhance the company's integrated advantages. The company plans to acquire 60% of the shares of Silver Valley Pharmaceuticals. In terms of research and development, Silver Valley Pharmaceuticals has complete clinical development experience and consistent evaluation experience with respiratory drugs in Class 1.1, which will provide important support for the company's future clinical development. In terms of production, Yingu Pharmaceutical has a complete formulation production team and production base. By integrating internal resources, the company can use the Yingu Pharmaceutical production base to increase the completion rate of existing production capacity while completing the production rate of the two main dosage forms of respiratory drugs, nasal sprays and inhalation solutions, to help the company quickly achieve batch production of products under development and shorten the time for the company to expand downstream formulations. In terms of sales, Silver Valley Pharmaceutical has set up a sales team covering key respiratory hospitals. The company can complete the formulation sales team and channel layout ahead of schedule to lay the foundation for the sale of future steroidal hormone respiratory drugs.

Investment advice: The company has laid out a comprehensive “intermediate-API - formulation” industry chain. Without considering the acquisition of Silver Valley Pharmaceuticals, we predict that the company will achieve revenue of 14.04/15.38/ 1,669 billion yuan in 2024/2025/2026, an increase of 9.70%/9.50%/8.50%; achieve net profit of 0.57/0.73 billion yuan, corresponding to PE of 45/36/31 times, maintaining the “recommended” rating.

Risk warning: policy risk, acquisition risk, new product development risk, market competition exacerbates risk; generic drug risk.