Incident: 2024. 4.28 The company released its 2023 annual report. In 2023, the company achieved operating income of 7.964 billion yuan, an increase of 21.27% over the previous year, and the main business development was good; net profit attributable to shareholders of listed companies was 1,779 billion yuan, a year-on-year decrease of 5.35%, mainly affected by investment losses confirmed by the GDS Long-term Equity Investment Equity Law. 2024.4.29 The company released its performance report for the first quarter of 2024. In 24Q1, it achieved total revenue of 2,056 billion yuan, a year-on-year decrease of 0.33%, net profit to mother of 757 million yuan, an increase of 5.32% year-on-year, and net profit after deducting non-return to mother of 590 million yuan, a year-on-year decrease of 16.64%.

Demand for terminal blood products was strong in 2023, and the revenue growth rate was relatively fast; 2024Q1 was mainly affected by the high base for the same period last year, and revenue declined. In 2023, sales of the main products, static acrylic and imported albumin, achieved rapid growth, and gross margin was relatively stable. By category, human blood albumin achieved revenue of 4.935 billion yuan in 2023, an increase of 16.84% over the previous year, and a gross profit margin of 26.00%. Among them, imported albumin was 3.504 billion yuan, up 28.16% year on year, with a gross profit margin of 18.63%; self-produced albumin was 1,431 billion yuan, a decrease of 3.94% year on year, with a gross profit margin of 44.06%. Jingbing grew rapidly, achieving revenue of 1,805 billion yuan, a year-on-year increase of 37.47% and a gross profit margin of 56.63%. There was a decline in 2024Q1 revenue and net profit after deduction. We speculate that it was mainly affected by the high base for the same period last year, and changes in the company's product structure (import, agency).

The slurry harvesting volume is good, and the number of pulping stations and the scale of pulp collection continue to maintain the leading position in the country. The company's annual pulping volume exceeded 1,500 tons, and the amount of pulp collected reached a record high. The company increased the excavation of existing pulp stations, and increased the recruitment of new pulp donors and actively expanded the number of plasma stations. In 2023, the company added 3 new single plasma collection stations through approval for construction and acquisition (Fengzhen Tonglu Single Plasma Collection Station, Yongfu Guanfeng Single Plasma Collection Co., Ltd., Xincheng Guanfeng Single Plasma Collection Co., Ltd.). The existing 44 plasma stations are distributed in 11 provinces, and are located in Guangxi, Hunan, Hainan, Shaanxi, Anhui, Guangdong, Inner Mongolia, Zhejiang, Hubei, China Eleven provinces (autonomous regions) in western and Shandong.

Layout factor products have been developed, and no similar target products have been launched in the world. The company is committed to research on the treatment of hemophilia. The clinical trial application for Shanghai Laishi SR604 injection (30mg (1mL) /bottle) was accepted in December 2023, and the drug was approved for clinical trials in March 2024. SR604 injection is a humanized monoclonal antibody formulation with high affinity binding to human activated protein C, which specifically inhibits the anticoagulant function of human activated protein C. It is intended for the prevention and treatment of bleeding in patients with hemophilia and congenital coagulation factor VII deficiency. Currently, routine prevention and treatment for hemophilia at home and abroad is intravenous administration of blood sources or recombinant coagulation factors 2-3 times a week. SR604 plans to conduct a phase I clinical trial of subcutaneous injection prevention treatment every 4 weeks. Some of the pre-clinical research results have been published in the international hematology research journal Blood in the form of a cover article. Up to now, there are no products with the same target as this drug on the market in the world.

Investment advice: The company continues to increase in the number of pulp stations and slurry harvesting capacity, and adheres to the “endogenous+extension” two-wheel drive strategy, and continues to strengthen mergers and acquisitions and integrated collaboration. We expect the company's net profit to be 21.98/25.30/2,917 billion yuan in 2024-2026. The current stock price corresponds to 2024-2026 PE is 22/19/16 times, maintaining the “recommended” rating.

Risk warning: Risk of rising raw material prices affecting product gross margin; risk of regulation of single plasma collection stations; risk of downstream demand falling short of expectations; risk of product sales falling short of expectations; risk of R&D progress falling short of expectations.