The results grew rapidly in 2023, and the good business trend continued in the first quarter of 2024. In 2023, the company achieved revenue of 1,017 million yuan (+67.51%), net profit attributable to mother of 272 million yuan (+40.07%), and net profit of non-return to mother of 259 million yuan (+52.48%). Among them, 23Q4 had quarterly revenue of 304 million yuan (+62.66%), net profit attributable to mother of 70 million yuan (+44.00%), and net profit of non-return to mother of 58 million yuan (+57.96%). Revenue for the first quarter of 2024 was 216 million yuan (+34.04%), net profit attributable to mother 50 million yuan (+42.06%), net profit after deducting non-return to mother of 49 million yuan (+41.00%).

The company's revenue growth rate for the full year and four quarters of 2023 was over 60%, mainly due to the continuous strengthening of the “technology transformation+contract development+equity sharing” business model, and sufficient orders continued to be fulfilled. The results for the first quarter of 2024 continued to grow rapidly. At the same time, the increase in generic drug adoption rates and project approval led to corresponding expected debt reversals, which also strengthened performance.

The share of self-developed technological achievements transformation business continues to increase. In 2023, the company's self-developed technological achievements transformation business transformed a total of 104 projects, achieving revenue of 370 million yuan (+77.7%), increasing the revenue share to 38.6% (+2.2pp), increasing the gross profit share to 46.3% (+4.2pp), and the business structure continued to be optimized.

Ongoing orders are plentiful, and new orders are growing rapidly. In 2023, the company moved to the R&D headquarters to expand the laboratory and increase the size of the technical team. Order acceptance and execution capabilities were further enhanced. New orders of 1.36 billion yuan (tax included) were added throughout the year, up 35.1% year on year. By the end of 2023, orders in progress were 1,586 billion yuan (excluding tax), an increase of 18.9% year on year. Sufficient orders provided a guarantee for future performance growth.

Investment advice: The company's business trend continues to improve, and orders continue to grow rapidly. Considering the intensification of competition in traditional generic drug CRO and the company's continued increase in R&D investment, raise the 24-25 revenue forecast, lower the 24-25 profit forecast, and add the 2026 profit forecast. The estimated revenue for 2024-2026 is 13.7/18.0/ 2.29 billion yuan (the original 24-25 year was 1.371.77 billion yuan), a year-on-year growth rate of 35%/31%/28%, net profit to mother of 3.8/4.9/650 million yuan (originally 24- (3.9/510 million yuan in '25), with a year-on-year growth rate of 39%/30%/32%. The current stock price corresponds to PE 20/15/12x, maintaining a “buy” rating.

Risk warning: risk of drug development failure; risk of order execution falling short of expectations; risk of regulatory policy.