Brief performance review

On July 30, 2024, the company announced that revenue for the first half of 2024 was 0.199 billion yuan, up 14.44% year on year, and returned to the mother/deducted non-net profit of 0.022/0.019 billion yuan, up 8.14%/106.55% year on year. Revenue for the second quarter of 2024 was 0.095 billion, up 2.78% year on year, and due to mother/deducted non-net profit of 0.005/0.004 billion yuan, up -13.08%/33.56% year over year. The performance was in line with expectations.

reviews

The peptide layout is comprehensive, with steady revenue, leading technology, and rich reserves. (1) Performance:

The company's 1H24 revenue was nearly 0.2 billion yuan, up 14.44% year on year; mainly sales of somatostatin and atobibane increased after winning the bid in June 2023, while overseas sales of APIs also rose rapidly. The company's net profit declined year-on-year in 2Q24, mainly due to a year-on-year increase in R&D expenses of nearly 10 million yuan: ① The company invested 12.5 million yuan to cooperate with Zhejiang Dingchang Pharmaceutical to develop an injectable octreotide acetate microsphere project, and the initial investment of 5 million yuan was all included in R&D expenses; ② simeglutide and salmon calcitonin entered the pilot phase and invested heavily in paid R&D; ③ KJMRT-YF001 (cyclic peptide-113) R&D investment increased. (2) Technology: The company has focused on large-scale production technology for polypeptide drugs for more than 20 years. It has mastered independent core technologies such as long-chain peptide coupling, large-scale production of monosulfide peptides, verification of dithiocyclic peptides, polyethylene glycolization/fatty acid purification, etc., and has solved technical bottlenecks in large-scale production of multiple peptide raw materials. (3) Variety: During the reporting period, the company's raw materials such as cetrorelix acetate, posaconazole, and bevibatide citrate were approved, posaconazole injections were approved, and bevibatide citrate injections were approved, a product providing CDMO (customized R&D and production organization) services to the company's customer Biotech. At present, the company has approved 19 types of polypeptide raw materials; there are 14 domestically, of which enfuvirotide and cabectomycin are the first domestic imitation varieties; abroad, the company has obtained US DMF registration for 10 varieties, including bivalirudine, etibatide, and liraglutide; and Etibant is the first generic ingredient to be submitted for the US DMF filing.

New peptide production capacity is about to be released, and the volume of API exports in the second half of the year is worth looking forward to. (1) Production capacity:

The main construction of the company's “Polypeptide API Production Line Project with an Annual Output of 395 kg”, “Formulation Industrialization Technology Transformation Project”, and “Peptide Innovative Drug CDMO, API Industrialization Project” was completed during the reporting period and has entered the equipment commissioning stage. (2) Overseas space: The global peptide market is growing rapidly. More than 60 types of marketed peptide drugs are synthesized by chemical methods; the international market price of large APIs is high, and the peptide CDMO market is worth 10 billion US dollars.

Profit Forecasts, Valuations, and Ratings

We maintain our profit forecast. We expect the company's 2024/25/26 revenue to be 0.539/0.687/0.85 billion yuan, an increase of 24%/27%/24% year on year; the company's net profit to mother for 2024/25/26 is 0.12/0.15/0.186 billion yuan, up 70%/25%/24% year on year. Maintain an “Overweight” rating.

Risk warning

Risks such as R&D falling short of expectations, increased market competition, and fluctuating orders from overseas customers.