2Q24 maintains a steady growth trend. 2H24 is expected to accelerate performance and maintain the buying rating

The company released its mid-year report on 7/30. 1H24 achieved revenue of 2.76 billion yuan (+15.1% yoy), net profit of 0.63 billion yuan (+15.5% yoy), net profit of 0.63 billion yuan (+16.3% yoy), of which 2Q24 revenue was 1.41 billion yuan (+15.1% yoy), net profit of 0.36 billion yuan (+14.6% yoy), net profit of 0.37 billion yuan (+16.0% yoy) In addition to 3Q23 objective factors, revenue maintained a 15% + growth rate for 5 quarters (year-on-year revenue growth rate: 1Q23/2Q23/3Q23/4Q23/1Q24/2Q2418.8/21.1/12.2/17.6/15.2/ 15.2/ 15.1%). Considering the low base of 2H23, we expect 2H24 to accelerate performance growth, driven by multiple drivers of hospital-side diagnosis and treatment recovery, controlled anesthesia doses, and the launch of new products, leading to an increase in both performance and valuation. We gave the company an EPS of 1.23/1.50/1.85 yuan for 24-26 years, and the segmented valuation method gave a target price of 34.29 yuan (previous value of 34.53 yuan).

2Q24 revenue and profit grew rapidly under the high base, and various operating indicators improved 1) 2Q24 still achieved high growth under the 1Q24 high base: 1-4Q23 after deducting non-net profit +20.8/+21.6/+0.4% yoy vs full year 23 net profit +16.1% yoy, 1Q24/2Q24 showed strong resilience. We expect 2H24 to achieve 20% + revenue and profit growth rate; 2) Along with revenue growth, scale The effect is evident: 1H24 sales expense ratio decreased by 2.6pp (sales expense ratio: 1H24 30.0% vs 1H23 32.6% vs 1H 2235.7% vs 1H21 35.2%).

Diagnosis and treatment recovery led to strong growth in the anesthesia line. I am optimistic that the 24-25 performance will accelerate 1H24's industrial sector to achieve revenue of 2.36 billion yuan (+14.5% yoy), of which: 1) The anesthesia line:

1H24 achieved revenue of 1.52 billion yuan (+20.0% yoy), of which the rapid dose of anesthesia was controlled (estimated revenue of ~1.2 billion yuan in 24 years, +~ 50% yoy), and we expect revenue growth of ~ 20% in 24; 2) Mental Line: 1H24 achieved revenue of 0.6 billion yuan (+8.2% yoy), and we expect 10% + revenue growth in 24; 3) Neural Line: 1H24 achieved revenue of 0.08 billion yuan (+8.5%) yoy), but considering the company's introduction of a new class 1 drug, deuterabenazine tablets, we expect nerve lines to double in 24 years. Looking ahead to 24 years, we believe the company is expected to benefit from hospital-level diagnosis and treatment recovery and high barriers to control the release of essential narcotics & Class 1 new drugs, and achieve ~ 20% revenue growth.

Research and development accelerates, and ocelidine fumarate and deuterphenazine tablets are expected to begin the harvest period for new products 1) Oxelidine fumarate (TRV130): μ-opioid agonist, approved for marketing at 5M23 and included in national health insurance at the end of 23. It is expected to co-resonate with the fentanyl series. We expect a peak of 2.0+ billion yuan; 2) Antitan (deuterphenazine tablets): 2M24 was introduced from Teva and included in national health insurance at the end of 2020, and we expect a peak of 1 billion yuan + billion yuan; 3) Early lactating pipeline Injectables (anesthetic sedation, etomide modification NH600001 , phase 3 clinical), NHL35700 (antisperm, phase 2 clinical), R ketamine (antidepressant, phase 1b/2 clinical), NH102 (antidepressant, phase 1 clinical end), NH130 (Parkinson, phase 1 clinical end), NH300231 (antisperm, phase 1 clinical trial), etc. are progressing at an accelerated pace.

Risk warning: There is a risk that sales of core products purchased in volume will decline, and product development will fall short of expectations.