Event: The company released its 2024 semi-annual report. In the first half of 2024, Kanghong Pharmaceutical achieved revenue of 2.294 billion yuan (+19.46%), net profit of 0.692 billion yuan (+31.77%), and net profit of non-return to mother 0.678 billion (+33.10%). Revenue for Q2 alone was 1.201 billion yuan, up 16.01% year on year, and net profit without return to mother was 0.315 billion yuan, up 29.73% year on year.

Combercip has been qualified to enter overseas markets, and clinical trials have been carried out in high doses of compassic. In June 2024, the company received the Langmu (Compassic Eye Injection) drug registration certificate approved and issued by the Food and Drug Administration of the Ministry of Health of the Myanmar Government, and the company's Class I biological-compassic ophthalmic injection was eligible to enter the Myanmar market. The treatment of diabetic macular edema (DME) with high-dose compassic ophthalmic injections is currently in Phase I clinical phase I.

The gene therapy segment lays out two ophthalmology products from China and the US, focusing on the treatment of ophthalmic diseases. In the gene therapy sector, the company already has two approved clinical trial projects in China and the US. The KH631 ophthalmic injection and KH658 ophthalmic injection to treat neovascularization age-related macular degeneration are both in phase I clinical phase. The KH658 ophthalmic injection inhibits the growth of angiogenic lesions by continuously expressing anti-VEGF protein in the human body, and is expected to achieve long-term benefits for patients with a single dose.

Investment advice: The company has a rich pipeline of ophthalmology products and a long-term strategic layout. We forecast net profit to mother for 2024-2026 to be 1.247/1.446/1.606 billion yuan, corresponding to PE valuation 13.7/11.9/10.7 times.

Maintain a “buy” rating.

Risk warning: risk of changes in industry policies, risk of product sales falling short of expectations, R&D risk, etc.