Revenue and new orders grew steadily, and profit growth slowed under a high base

2024H1 achieved revenue of 0.525 billion yuan, up 23.88% year on year; net profit due to mother 0.134 billion yuan, up 12.35% year on year; net profit after deducting non-return to mother 0.123 billion yuan, up 3.13% year on year. Looking at Q2 alone, Q2 achieved revenue of 0.309 billion yuan, up 17.65% year on year and 43.42% month on month; net profit to mother of 84.39 million yuan, flat year on year, up 69.39% month on month; net profit without return to mother of 74.48 million yuan, down 12.28% year on year, up 52.86% month on month. In terms of profitability, the company's gross profit margin was 69.14%, up 2.05 pcts year on year, and overall stable; the net interest rate was 27.27%, down 4.83 pcts year on year. The net interest rate fluctuation was mainly due to the company's share business which confirmed more high profits during the same period in 2023. The amount of new orders signed by the company was about 0.711 billion yuan, an increase of 13.38% over the previous year, and the overall increase in new orders was steady. Considering industry competition and the increase in R&D expenses, we lowered the company's profit forecast for 2024-2026. The estimated net profit for 2024-2026 is 0.321/0.42/0.546 billion yuan (originally estimated 0.394/0.569/0.809 billion yuan), EPS is 2.95/3.86/5.01 yuan, and the current stock price corresponding PE is 13.3/10.2/7.8 times. In view of the rapid development of the company's self-development and transformation business, we maintain a “buy” rating.

The self-research transformation business is developing rapidly, and the 2024H1 contract business and self-research transformation business, which are new growth points of the R&D agency, achieved revenue of 0.206/0.29 billion yuan, an increase of 5.77%/52.43% over the previous year, and the self-research transformation business developed rapidly. The company has stepped up research and development. Currently, it has carried out a number of new drug research and development projects, covering 11 small-molecule chemicals and 6 macromolecular biopharmaceuticals; it has now obtained IND approvals for 4 new Class 2 drugs, and 1 new Class 1 drug has completed phase I clinical trials, and it is expected to become a new growth point in the future.

The CDMO business and clinical business are growing rapidly, and integrated service capabilities continue to increase

The company continues to promote a comprehensive drug R&D and production integrated service platform of “pharmaceutical research+clinical trials+customized R&D and production”. Thermo Pharmaceuticals, the production subsidiary of 2024H1, received a total internal and external revenue of 62.02 million yuan; a total of 520 implementation verification projects have been completed, and 303 registration projects have been declared. With 2024H1, the company's clinical business achieved revenue of 92.59 million yuan, an increase of 32.22% over the previous year; by the end of June 2024, 300 BE tests and 2 pharmacokinetic studies (including 1 new class 1 drug) had been completed, nearly 150 clinical trials had submitted registration applications, and the clinical business developed rapidly.

Risk warning: Domestic policy changes, declining demand for generic drug research and development, worsening industry competition pattern, etc.