Incidents:

The company released its 2024 semi-annual report: in the first half of 2024, the company's revenue increased 25.06% over the same period last year, mainly because sales of sidabendamide increased 11.74% year on year and revenue increased 4.15% year on year (health insurance price reduction 6%); sales of siglitazide increased 396.15% year on year, and revenue increased 632.48% year on year; net profit attributable to shareholders of listed companies fell -126.34% compared to the same period last year, mainly because at the end of the same period last year, the company no longer included the scope of the company's consolidated statements. Shares confirmed investment income at fair value, which led to an increase in net profit for the same period of the previous year; net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss increased 68.04% year on year, mainly due to a year-on-year decrease in expenses while the company's operating income increased during the reporting period.

Comment:

During the reporting period for the first half of 2024, the company's net cash flow from operating activities was 15.55 million yuan, an increase of 112.81% year on year, mainly due to the company's R&D investment of 180.1 million yuan, down 27.26% from the same period last year, of which the current fee amount was 102.21 million yuan, a year-on-year decrease of 36.97%. Mainly, the R&D expenses for the same period last year were included in the scope of the consolidated statement. At the end of June 2023, it lost Microchip Xinyu The consolidated statement for the current period after control does not include R&D expenses related to the new microchip domain.

Investment advice

Considering changes in the company's sales structure and the approval of several new products to be launched one after another, the future release of innovative products can be expected, maintaining the previous profit forecast. That is, we forecast that the company's total revenue for 2024-2026 will be 0.67/0.87/1.14 billion yuan, up 28%/30%/31% year over year, respectively, and net profit to mother of -0.092/-0.024/0.088 billion yuan, up -203%/74%/475% year-on-year respectively. EPS was -0.22/ -0.06/0.22 yuan respectively, corresponding to the closing price of 16.9 yuan/share on August 27, 2024, and PE was -75/-292/78X respectively. Considering that the company's performance has a lot of room for growth, it maintains a “buy” rating.

Risk warning

New drug development fell short of expectations, market competition intensified, and commercialization performance after product launch fell short of expectations.