Key points of investment:

The customized business is growing steadily, and orders from major European customers are helping to accelerate.

The company's customized business mainly contributes revenue from the small-molecule CDMO business. The company mainly serves advanced intermediates for innovative drugs overseas, and has strong barriers. Revenue declined significantly during the pandemic. It began to achieve restorative growth in 2023. Combined with the May 23 announcement, it signed large orders with European customers. The total contract amount was 0.1 billion US dollars (tax included). The target of the contract was cGMP advanced pharmaceutical intermediates. According to procurement guidelines, the order was executed over 6 years, and there is strong certainty that the customized business has grown steadily.

The GLP-1 industry chain was the first to benefit, and the company actively expanded production and embraced the trend.

The GLP-1 industry chain is the first to benefit: with the popularity of overseas sales of GLP-1 star products such as Simei & tirpotide, igniting global R&D enthusiasm, the R&D phase will spawn demand for API procurement, and the industry chain performance will be reflected first; the company will actively expand production and land several tons of production capacity by the end of 25: the company's current production capacity is tonnage, and the company changed fund-raising project funds to build a 601/602 workshop for peptide APIs, with a total production capacity of 5.5 tons; demand is strong, and orders will continue: 2023, well-known domestic biotechnology companies Pharmaceutical company signed The GLP-1 API CDMO cooperated and signed separate orders for simeglutide injections and oral administration in Europe and Latin America. Subsequently, as the project progresses and superimposes new orders, the company will significantly benefit from GLP-1 industry trends, which can be expected in the future.

The implementation of formulation production capacity and approval of oseltamivir granules is expected to accelerate the company's current formulation, mainly oseltamivir capsules. With the implementation of the company's production capacity in China Pharmaceutical Port, approval of new dosage forms of oseltamivir granules, and steady progress in subsequent pipelines, the company's formulation business is expected to maintain a good growth trend.

Profit forecasting and investment advice

As a leading domestic peptide API company, Nootech is actively expanding production and embracing opportunities under the GLP-1 industry trend. It is expected to achieve several tons of production capacity by the end of 25, and is expected to accept GLP-1 related orders, and growth is outstanding. We expect the company's net profit to be 0.36/0.52/0.74 billion in 2024-2025, with a year-on-year increase of 120%/44%/44%, corresponding PE 42.2/29.3/20.4 times, respectively, and the average adjusted PE value of the 24-year comparable company is 40.9 times. Considering that the company clearly benefits from GLP-1 industry trends, and has sufficient subsequent production capacity and strong growth, it can enjoy a certain valuation premium, initial coverage, and a “buy” rating.

Risk warning

Production capacity construction falls short of expectations, peptide API orders fall short of expectations, risk of price reduction of peptide APIs