Incident: The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved total operating revenue of 3.177 billion yuan, an increase of 14.39%; net profit to mother of 859 million yuan, an increase of 0.20% year on year; net profit after deducting non-return to mother was 847 million yuan, down 0.86% year on year.

Jinsai Pharmaceuticals: Growth hormone maintains resilience. 2024Q1 Jinsai Pharmaceutical achieved revenue of 2.47 billion yuan, up 4.97% year on year; achieved net profit of 868 million yuan, down 3.02% year on year; net interest rate reached 35.14%, which is still at a high level. Jinsai Pharmaceutical adheres to compliant development. Through innovative promotion models and a significant increase in the speed of new customer development, it has increased its efforts to promote long-term water injections, and actively achieved growth in pure sales, new patients, and new customers.

Other segments: 100 grams of bioshingles brought new amounts. 2024Q1 Biotech achieved revenue of 270 million yuan, an increase of 50.84% year on year; realized net profit of 61 million yuan, an increase of 238.89% year on year. Huakang Pharmaceutical achieved revenue of 191 million yuan, an increase of 15.76% year on year; realized net profit of 11 million yuan, an increase of 22.22% year on year. Hi-Tech Real Estate achieved revenue of 236 million yuan, up 232.39% year on year; realized net profit of 06 billion yuan, up 500% year on year.

Sales rates have declined, and R&D expenses have increased significantly. 2024Q1 has a sales cost of 928 million yuan (+10.31%) and a sales rate of 29.20% (-1.08pp). The company is still actively promoting growth hormone, especially long-acting water injections. Management expenses of 236 million (+26.45%), management fee rate 7.44% (+0.71pp). The R&D cost is 422 million yuan (+25.85%), and the R&D rate is 13.27% (+1.21pp). The company is actively developing growth hormone indications and vaccine research and development. The 2024Q1 inventory balance was 4.773 billion yuan, accounting for 15.57% of assets (-1.98pp).

Profit forecast and investment suggestions: We expect the company's revenue for 2024-2026 to be 161.26, 179.66 billion yuan, and 19.057 billion yuan, respectively, up 10.71%, 11.41%, and 11.08% year-on-year; net profit to mother will be 50.24, 56.15, and 62.41 yuan, respectively, up 10.84%, 11.77%, and 11.14% year on year. The company is a leader in the growth hormone industry and still holds most of the market share. At the same time, a high percentage of dividends are given back to shareholders, maintaining a “buy” rating.

Risk warning: the risk of increased competition for growth hormone, the risk of falling short of expectations in research and pipeline progress, and the risk of price reduction in drug tenders.