Event: The company released its 2024 semi-annual report. In the first half of 2024, Jingxin Pharmaceutical achieved revenue of 2.15 billion yuan (+11.02%), net profit of 0.402 billion yuan (+27.28%), and net profit of non-return to mother 0.334 billion (+15.19%). Single Q2 revenue was 1.089 billion yuan, up 11.59% year on year, and net profit excluding non-return to mother was 0.177 billion yuan, up 15.98% year on year.

The company's operations are steady, and the finished drug business has resumed a good growth trend. 2024H1's finished drug revenue was 1.301 billion yuan (+17.13%), mainly due to sales system upgrade, which brought incremental space; API revenue 0.501 billion yuan (+5.66%); medical device revenue was 0.312 billion yuan (+0.46%).

The effects of the marketing model reform are gradually showing, and revenue from outside the hospital is growing rapidly. Since 2023, the company changed from a “split line” marketing model with three major pipelines to set up a hospital division and retail division, focusing on deepening the in-hospital market and expanding the out-of-hospital market, respectively. It has deepened strategic cooperation with many pharmacy chains to accelerate the retail business layout and drive rapid growth of the out-of-hospital market. 2024H1, the revenue of the finished pharmacy market increased by more than 80% year-on-year. Meanwhile, 2024H1 sales expenses decreased by 3.63% year-on-year, and the sales expense ratio was 17.85% (-2.72pct).

Dacinib, a new class 1 drug, was officially commercialized, and the company entered a new stage of “creative integration”. On March 25, 2024, the company's first new Class 1 drug for treating insomnia, was officially commercially delivered. More than 200 hospitals have now been developed. The company uses neuropsychiatric and cardiovascular therapeutics as the main R&D pipeline for innovative drugs, and various projects are progressing in an orderly manner. Among them, clinical trials of JX11502MA capsules and rehabilitative enteric capsules II are ongoing; clinical phase I of JX2105 capsules is progressing smoothly.

Investment advice: The company insists on management empowerment and is fully resilient in operation. We forecast net profit to mother for 2024-2026 at 0.722/0.822/0.941 billion yuan, which is 13.6/12.0/10.5 times the PE valuation. Maintain a “buy” rating.

Risk warning: risk of changes in industry policies, risk of product sales falling short of expectations, R&D risk, etc.