In the first half of this year, the domestic economic environment has been complex and changeable, and this macroeconomic fluctuation has led to various challenges in the pharmaceutical industry. For example, in terms of market demand, the growing demand for health and treatment has driven the market demand for pharmaceutical products, resulting in prominent supply and demand imbalances in some niche markets. At the macroeconomic level, the fluctuations in the global economy, changes in trade policies, and geopolitical uncertainties have impacted raw material supply, production costs, and market access, putting pressure on the stable development of the pharmaceutical industry.

However, despite these challenges, some companies in the pharmaceutical industry have still shown resilient growth.

Recently, Sinco Pharma released its mid-year financial report for 2024. The report shows that Sinco Pharma achieved a revenue of 1.527 billion yuan in the first half of the year, a year-on-year growth of 40.1%. The pharmaceutical sales revenue was 1.516 billion yuan, and the medical beauty service revenue was 11.093 million yuan. At the same time, the company's profitability continued to grow, with a gross profit of 0.173 billion yuan, a year-on-year increase of 13.6%, mainly due to the continuous increase in product sales volume; pure profit was 23.87 million yuan, with basic and diluted earnings per share of 0.0117 yuan.

Why not take a look through the financial report to further understand what Sinco Pharma has accomplished in the first half of the year?

1. Core pharmaceutical sales steadily climbing, injecting cash flow to drive growth

First, let's take a look at Sinco Pharma's core sales product - human serum albumin injection.

Human serum albumin, as an indispensable blood product in clinical medicine, has maintained strong growth in market demand. Especially in China, based on a large population base, significant aging trends, and increasing corresponding indications, the demand for albumin has also increased. At present, the issuance of domestic albumin has remained relatively stable, and the growth of imported albumin has become the main driving force for the increase in market supply. In the first half of the year, the company's human serum albumin batch issuance reached 40.3 million bottles, a small increase of 4.4% year-on-year, with the import and domestic albumin accounting for 68.0% and 32.0% respectively.

Currently, the issuance of domestically produced albumin has remained relatively stable, and the growth of imported albumin has become the main driving force for the increase in market supply. In the first half of the year, the company's batch issuance of human albumin reached 40.3 million bottles, a slight increase of 4.4% compared to last year, with the proportion of imported and domestically produced albumin being 68.0% and 32.0% respectively.

It is worth noting that although the uncertainty of the domestic economic environment has brought pressure on the supply chain and market layout of human albumin, sinco pharma still expects the annual batch issuance in 2024 to achieve a significant growth of around 10 to 15%. This expectation is based not only on the increase in imported albumin supply, but also on the expansion of domestic manufacturers' production capacity, demonstrating the company's optimistic outlook for future market development.

Due to the significant impact of exchange rate fluctuations on the sales business of human albumin injections of sinco pharma, the company has expressed its commitment to maintaining keen market insights, closely monitoring market dynamics in order to quickly respond to any possible exchange rate changes, and to address market changes through prudent financial control and diversified global strategy, ensuring the company's stable development and manageable risks.

In terms of product and market expansion, the company will also continue to intensify its efforts to meet market demand and enhance customer satisfaction through continuous optimization of product structure. The company deeply understands that only by providing high-quality products and services can it win the trust and support of customers. It is actively taking measures to reduce costs and risks, improve operational efficiency, and optimize supply chain management to maintain competitiveness.

2. Rapid clinical progress of medical beauty products, opening up the growth curve.

At the same time, sinco pharma is continuously advancing the clinical progress of medical beauty products such as the youth injections and intimate injections, in an attempt to quickly open up the company's growth curve.

In the first half of the year, the youth injection project in cooperation with Peking Nuo Kanda made significant progress. The clinical trial of the injection polydioxanone filler youth injection S-type has been initiated at 9 research centers including Xuanwu Hospital of Capital Medical University, with the enrollment rate of the clinical trial exceeding half, and the clinical effect being good. It is also noteworthy that the subjects' enrollment work for this clinical trial was completed in July 2024, one month ahead of the original plan, and it is expected to complete the clinical trial and submit the product registration application in the second half of 2025. In addition, the company is actively exploring diversified development in the field of youth injections, conducting R&D of multiple models of youth injections to meet the needs of different consumers.

In the field of intimate injections and other new materials, the company is also collaborating with Peking Nuo Kanda to develop intimate injections and polydioxanone filler materials. The animal preclinical trials have been completed and the process assessment is underway. Meanwhile, the company's independently developed new medical aesthetics materials and their corresponding three types of medical instruments will be applied to improve wrinkles for different medical aesthetic purposes from youth injections, mainly for filling injections for fine wrinkles on the face or other areas. The theoretical research has been completed and has entered the stage of safety evaluation of the samples. It is expected that the product will be verified in production by the end of 2025 and obtain the qualified inspection report from relevant regulatory agencies.

As the medical beauty product line continues to expand and clinical trials deepen, sinco pharma will also provide consumers with more high-quality and diversified medical beauty products, injecting more new vitality into the company's long-term development.

Summary.

In general, with the steady development of the main business of biological products, Sinco Pharma continues to gain a stable source of income. At the same time, the gradual release of the potential of medical beauty products is expected to open up new growth areas for the company. Under such dual driving forces, the company's performance may be standing at a new growth starting point.

From an investment perspective, the valuation of Sinco Pharma is currently at a historical low level. Considering the growth potential of the company in the field of biological products and medical aesthetics, its core valuation logic should also shift to the "biological products + medical aesthetics" logic. It is expected that the subsequent performance will bring opportunities for valuation reshaping for the company.