occurrences

On August 15, 2024, the company released its 2024 semi-annual report. 2024H1 achieved revenue of 2.632 billion yuan, a year-on-year increase of 35.39%; net profit to mother of 0.253 billion yuan, an increase of 133.04% year-on-year.

The growth rate of our own products is remarkable, and new breakthroughs have been achieved in overseas business. 2024H1 achieved revenue of 2.632 billion yuan, of which its own pharmaceutical products (including imports) achieved revenue of 1.856 billion yuan in the first half of the year, an increase of 76.58% over the previous year. The domestic pharmaceutical market achieved revenue of 1.855 billion yuan, an increase of 57.42% over the previous year. China's own pharmaceuticals (including imports) achieved revenue of 1.65 billion yuan, an increase of 88.29% over the previous year. In the company's 2024H1 domestic pharmaceutical business, 22 of its own (including imported) products achieved sales revenue of over 10 million yuan, a total of 1.501 billion yuan, an increase of 102.55% over the previous year, accounting for 90.94% of domestic pharmaceutical sales revenue. Among them, 5 products over 100 million yuan and 3 products over 50 million yuan have formed a steady development trend of “large variety groups and multi-variety groups” that can grow over a long period of time. The company's own products have grown significantly, promoting the optimization of the overall revenue structure. 2024H1's overseas pharmaceutical products achieved revenue of 0.312 billion yuan (excluding sales of SciLin domestically), 16.22% year-on-year. Among them, the direct market (South Korea, the Philippines and Australia) achieved revenue of 0.162 billion yuan, an increase of 23.17% over the previous year. Among them, the overseas business sold 10 million yuan of pharmaceutical products. Their main products, SciLin (excluding domestic sales), SciTroPin, Zetai, and injectable triprorelin acetate, achieved a total overseas sales revenue of 0.158 billion yuan, accounting for about 50.70% of the company's overseas pharmaceutical product revenue in the first half of the year, an increase of 21.09% over the same period last year. We believe that the globalization of the company's pharmaceuticals will usher in a new stage of development in 2024, achieve a revenue structure centered on self-production (own ownership) and supported by agents, and achieve a new high in overseas drug revenue.

Elishu's domestic expansion is accelerating, and R&D innovation continues to advance. (1) Elishu has obtained EC approval from the European Commission for listing, and has initiated registration in Oman, Singapore, Thailand, Vietnam, Malaysia and other countries in accordance with other market registration requirements. It has been approved for sale in 31 countries/regions including China, the United States, the European Union, Iceland, and Norway, and plans to start shipping to some overseas markets one after another at the end of September 2024. 2024H0.1 billion Lishu accelerated sales volume in the domestic terminal market and completed the extension of the domestic validity period in accordance with regulations. (2) In terms of domestic chemical drug research and development, we have obtained 5 product registration certificates, including diazazine oral suspension solution, oxytocin injection, emestine fumarate sustained-release capsule, resorcinol injection, and nimodipine injection. (3) In terms of innovation in traditional Chinese medicine, the company continues to promote clinical research on stage Ib patients, 4 classic famous traditional Chinese medicine formulations, and improved new drugs.

Investment advice

The company's performance growth rate in the first half of 2024 was impressive, its own products grew rapidly, and overseas business achieved new breakthroughs. The marketing registration and commercialization process of Yilishu, the first self-developed Class I macromolecule innovative biopharmaceutical, was carried out in an orderly manner, and sales in the domestic terminal market accelerated. We expect the company's 2024-2026 revenue to be 5.227/6.148/7.292 billion yuan, up 28.49%/17.63%/18.60% year over year; net profit attributable to shareholders of listed companies will be 0.524/0.788/0.936 billion yuan, and EPS of 0.43/0.64/0.76, respectively. The current stock price for 2024-2026 PE is 24.79/16.48/13.87, respectively. Maintain a “buy” rating.

Risk warning

This includes but is not limited to: industry policy risk, risk of R&D falling short of expectations, risk of fluctuating raw material prices, risk of international operation, risk of impairment of goodwill, and uncertainty about transaction matters.