The industrial chain resonates, and the peptide C (D) MO industry is expected to usher in a period of rapid growth. 1. Demand side: The expansion of GLP-1 and the expiration of major patents drive strong demand growth: the patient base for weight loss is huge, and the industry boom is expected to continue. According to Sullivan data, the global peptide drug market is expected to be about 87.6 billion US dollars (+10.2%) in 2024, domestic about 15.6 billion US dollars (+19.1%); 2. Supply side: High production barriers lead to a better overall pattern, and peptide drug barriers follow downstream to enjoy high growth dividends: peptide drug production barriers follow downstream to enjoy high growth dividends. Higher Domestic players are limited, and only 8 companies have registered for Liraglutide and simeglutide APIs. We expect the potential global market space for GLP-1 blockbuster APIs in 2030 is about 5.18 billion US dollars, which is a broad market space.

The small but beautiful peptide company is expected to usher in rapid development after production capacity is released. 1. The peptide field has a comprehensive layout and significant first-mover advantage: the company has been deeply involved in the field of peptides for 23 years, covering peptide APIs, peptide formulations, and CDMO, an innovative peptide drug. It is a leading domestic peptide pharmaceutical process R&D and large-scale manufacturer. 2. The implementation of the new production capacity is expected to bring a new round of growth curve: ① In terms of pharmaceuticals, the main construction of the IPO fund-raising project “395 kg of peptide API production line project” has been completed in the first half of 2024; the construction of new 106, 107, and 108 API workshops is also progressing in an orderly manner. We expect that with the gradual implementation of new production capacity, the company's peptide API business is expected to grow at an accelerated pace; ② In terms of formulations, the fund-raising project “Formulation Industrialization Technology Transformation Project” is expected to reach the scheduled state of use in June 2025, at which time it is expected to bring peptides Of the pharmaceutical business Further expansion.

The three major sectors are developing collaboratively, and long-term growth can be expected: 1. Polypeptide APIs: rich product layout and strong customer base, which is expected to benefit from rapid growth in GLP-1 volume in the future. By the end of July 2024, the company had 19 self-developed polypeptide raw materials, and obtained domestic production approvals or activation records for 14 types of peptide APIs. Among them, enfuvirtide and cabecitracin were the first models in China. At the same time, 10 types of DMF filings were obtained. Among them, Etibant was the first generic API to submit this type of DMF registration; 2. Polypeptide formulations: basic market business, with many formulation products, which are expected to benefit from the integrated scale advantage of API formulations to drive continuous volume in the formulation sector; 3. Polypeptide CDMO: Currently, there are many early CDMO projects for the company's innovative peptide drugs. In the future, as front-end projects gradually expand to the back end, the sector is expected to gradually gain strength, bringing about long-term continuous growth.

Profit forecast and valuation: Based on the company's business layout plan and production capacity implementation, we expect the company's 2024-2026 revenue to be 0.563 billion yuan, 0.733 billion yuan, and 0.969 billion yuan, respectively, with growth rates of 29.51%, 30.10%, and 32.17% respectively; net profit to mother is 0.102 billion yuan, 0.139 billion yuan, and 0.178 billion yuan respectively, with growth rates of 45.21% and 35.72 billion yuan respectively %, 28.07% Considering the high popularity of the track where the company is located, the company itself has a certain first-mover advantage. It is expected that in the future, it will usher in rapid growth along with the implementation of new production capacity, cover for the first time, and give it a “buy” rating.

Risk warning events: The public data used in the research report may have the risk of information being delayed or not updated in a timely manner, the risk of production capacity growth falling short of expectations, the risk of failure of innovative drug research and development projects, the risk of falling gross margin, the risk of rising raw materials and their prices, environmental and safety production risks, and the risk of deviations in industry size estimates