Brief performance review

On August 27, 2024, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 2.841 billion yuan, a year-on-year increase of 5.59%; realized net profit due to mother of 0.726 billion yuan, an increase of 28.10% over the previous year; and realized net profit without return to mother of 0.723 billion yuan, an increase of 29.35% year-on-year. On a quarterly basis, in the second quarter of 2024, the company achieved 1.619 billion yuan, an increase of 15.76% year on year; achieved net profit due to mother 0.409 billion yuan, an increase of 34.28% year on year; realized net profit deducted from non-mother 0.41 billion yuan, an increase of 33.93% year on year.

Management analysis

Jingbai sales continued to grow, and the profitability of the blood products business continued to increase. The company actively explores the market, speeds up the process of pumping and product delivery, and effectively carries out tasks such as improving quality and efficiency.

In the first half of the year, the company achieved revenue of 1.114 billion yuan, a year-on-year decrease of 6.93%; intravenous human immunoglobulin achieved revenue of 1.339 billion yuan, an increase of 21.97%; and other blood products achieved operating income of 0.378 billion yuan, a year-on-year decrease of 2.56%. The company achieved a total revenue of 2.831 billion yuan in the first half of 2024, with a gross margin of 55.66%, an increase of 7.18 percentage points over the previous year.

Promote blood source development and steadily increase plasma volume. Relying on the background of strategic cooperation between Sinopharm Group and various regions, the company and affiliated blood products companies actively seek support from governments at all levels and health administration departments. Up to now, the company's single plasma collection stations are distributed in 16 provinces/autonomous regions across the country. The total number of single plasma collection stations has reached 102, of which 80 are in operation. The company's plasma collection volume reached a new high in the first half of the year. The 80 affiliated single-operation plasma collection stations achieved 1,294 tons of plasma collection, an increase of 15% over the previous year, and continued to maintain the advanced level in the country.

Adhere to innovation leadership and accelerate R&D progress. The company has always maintained a high level of investment in R&D, and has made new progress in R&D work. Chengdu Rongsheng obtained the “Drug Supplement Application Approval Notice” and passed the drug GMP compliance test, and the production and marketing of this product can be carried out, completing the main coagulation factor varieties and further consolidating the leading position in the domestic industry; Lanzhou blood prothrombin complex is in the marketing license application stage; Chengdu Rongsheng subcutaneously injecting human immunoglobulin, injectable recombinant human coagulation factor VIII-Fc fusion protein, etc., progressing smoothly; Wuhan hematopoietic human hematogen complex and Chengdu Rongshengren Coagulation Factor IX obtained the “Drug Clinical Trial Approval Notice”.

Profit Forecasts, Valuations, and Ratings

We maintain our profit forecast. We expect the company to achieve net profit of 1.363 billion yuan (+23%), 1.654 billion yuan (+21%), and 1.972 billion yuan (+19%) in 2024-2026, respectively.

The company's 2024-2026 EPS was 0.69, 0.84, and 1.00 yuan respectively, and the corresponding PE was 35, 29, and 24 times, respectively. Maintain a “buy” rating.

Risk warning

The expansion of plasma stations fell short of expectations; regulatory risks of single plasma collection stations; increased capital expenses brought about by new plasma extraction stations; risk of rising plasma collection costs; risk of product price fluctuations, etc.