Company events: The company released its 2024 semi-annual report. In the first half of 2024, it achieved operating income of 2.84 billion yuan, a year-on-year increase of 5.6%, and achieved net profit of 0.73 billion yuan, an increase of 28.1% year on year; in 24Q2, it achieved operating income of 1.619 billion yuan, an increase of 15.8% year on year, and achieved net profit of 0.409 billion yuan, an increase of 34.3% year on year. The performance was in line with market expectations.

The industry continues to be booming, and the company's performance is growing steadily and at a high rate. On the revenue side, under pressure from the short-term growth rate of 24Q1, the company's 24Q2 revenue grew back to 15.8% on the same period last year. We judge that on the one hand, industry demand continued to be high, and on the other hand, new varieties such as chromatographic isopropyl began to gradually contribute revenue. By product: 1) Albumin: 2024H1, achieved revenue of 1.11 billion yuan, -6.9%, gross profit margin of 52.6%, up 23 percentage points from the same period last year; 2) Jing C: achieved revenue of 1.34 billion yuan, up 8.4 percent year on year; 2) Jing C: achieved revenue of 1.34 billion yuan, year on year + 8.4 22.0%, gross profit margin of 57.5%, up 11.4 percentage points from the same period in '23. In terms of cost ratios, in the first half of 2024, the company's sales, management and R&D expenses rates were 3.9%, 8.3%, and 2.4%, respectively, and 5.7%, 8.0%, and 1.0%, respectively, for the same period in '23. In terms of net interest rate, 24H1's net interest rate reached 25.6%, up 4.5 percentage points from the same period last year. The company announcement showed that it was mainly due to factors such as product prices and cost control, which led to an increase in sales revenue and profit margins.

The company obtained several pulping stations during the 14th Five-Year Plan period, and the actual controller, Sinopharm Group, is strong. The company continued to maintain its leading position in the number of plasma collection stations and the scale of plasma collection in China. At the end of 2020, the company had 59 pulp collection stations (of which 55 were in operation). As of the first half of 24, the company had 102 pulp collection stations (80 in operation), the company collected 1,294 tons in the first half of 2024 (80 pulp collection stations in operation), and 1125 tons (76 plasma collection stations in operation) during the same period in '23, an increase of about 15% over the previous year. In the first three years of the 14th Five-Year Plan period, the company obtained 43 newly approved pulp collection stations, reflecting the company's strong strength in obtaining new pulp collection stations in the blood products industry. The pulp collection stations and pulp collection volume continued to grow steadily, laying the foundation for the company's future performance sustainability. Considering the position and strength of the actual controller Sinopharm Group in the Chinese pharmaceutical industry, we judge that Tiantan Biotech is expected to achieve impressive results in terms of future Xinna pulp collection stations. We believe that Tiantan Biotech has the potential to grow into a global giant in the Chinese biomedical industry in segmented fields.

New varieties of chromatographic isopropyl release are imminent, and there is plenty of room to increase the profit of tons of slurry. In terms of product echelon, Chengdu Rongsheng's fourth-generation chromatographic acin (10%) has already been marketed. Compared with third-generation hydrochloric acid, this product is safer and more efficient to use clinically. Considering that the blood products market in overseas developed countries is mainly chromatographic isopropyl, we believe that this product has great potential in the future market and is one of the main driving forces for the company's slurry profit increase in the future. In terms of other products under development, Lanzhou blood prothrombin complex is in the marketing license application stage; clinical trials on R&D topics such as human immunoglobulin injections under the skin in Chengdu, recombinant human coagulation factor VII A for injection, and recombinant human coagulation factor VIII-Fc fusion protein for injection are progressing smoothly; Wuhan blood prothrombin complex and Chengdu Rongsheng human coagulation factor IX have obtained the “Drug Clinical Trial Approval Notice”. The company's subsequent product echelon is expected to continue improving the company's profit level in the future.

Profit forecasting and valuation. We expect the company's net profit to be 1.41, 1.73, and 2.03 billion yuan respectively in 2024-2026, with year-on-year growth rates of 27.0%, 22.5%, and 17.8%, respectively. The PE corresponding to the current stock price is 33, 27, and 23 times, respectively, maintaining a “buy” rating.

Risk warning: risk of deteriorating competitive landscape; risk of sales falling short of expectations; industry policy risk, etc.