Event: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 2.841 billion yuan, a year-on-year increase of 5.59%; net profit to mother of 0.726 billion yuan, an increase of 28.10%; net profit after deducting non-return to mother of 0.723 billion yuan, an increase of 29.35% year-on-year. In the Q2 quarter, the company achieved operating income of 1.619 billion yuan, up 15.76% year on year; net profit to mother 0.409 billion yuan, up 34.28% year on year; net profit after deducting non-return to mother 0.41 billion yuan, up 33.93% year on year.
In the first half of 2024, the company achieved steady growth in sales of blood products. Among them, the operating income of Jingbing (including chromatography) was 1.339 billion yuan, an increase of 21.97% over the previous year. The profit side is expected to grow faster than the revenue side, mainly due to factors such as rising product prices and cost control.
The company's gross margin and net margin both increased in the first half of 2024. In the first half of 2024, the company's gross margin was 55.67%, up 7.14pct year on year. Among them, the gross margin of the core product albumin was 52.63%/+8.41pct, and the gross margin of static acrylic (including chromatography) was 57.49% /+11.42pct; the period cost ratio was 13.79%, down 0.06pct year on year, of which the sales expense ratio was 3.90%, down 1.79 pct year on year, mainly due to the company's sales policy adjustments, and the market development fee rate was 8.30%, up year on year 0.29pct, mainly due to a year-on-year increase in fixed depreciation and employee remuneration in Kunming; the R&D expense ratio was 2.43%, up 1.47pct year on year; the financial expense ratio was -0.83%, down 0.03pct year on year; benefiting from rising gross margin and period cost ratio optimization, the company achieved a net interest rate of 34.68% in the first half of 2024, an increase of 5.91 pcts year on year.
The pulping station was gradually put into operation, and the amount of pulp collected achieved a relatively rapid increase. Since 2023, the company has actively promoted the construction and application of its plasma stations. Twenty plasma stations, including Lincheng Plasma Station and Zhushan Plasma Station, have successively obtained “Single Plasma Collection Permits” and achieved official operation. Up to now, the company's single plasma collection stations have been distributed in 16 provinces/autonomous regions across the country, with a total of 102 single plasma collection stations, of which 80 are in operation. In the first half of 2024, the company took many measures to actively promote plasma collection, achieving 1,294 tons of plasma collection, an increase of 15% over the previous year, accounting for about 20% of the total amount of plasma collected in the domestic industry. The number of plasma stations and plasma collection scale of the company continued to maintain domestic leadership.
Adhere to innovation leadership and continue to advance in the research pipeline. 2024H1, the company has made positive progress in many R&D developments. Among them, Chengdu Rongsheng obtained the “Drug Supplement Application Approval Notice” in April and passed the drug GMP compliance test, completing the main coagulation factor varieties, further consolidating the company's leading position in the domestic industry; Chengdu Rongsheng's injectable recombinant human coagulation factor VIII-Fc fusion protein officially launched phase I clinical trials in April; PCC from Wuhan Blood System and human coagulation factor IX from Chengdu Rongsheng were approved for clinical use in April. In addition, PCC from Lanzhou blood is already in the marketing registration process; Chengdu Rongsheng's subcutaneous human immunoglobulin and injectable recombinant human coagulation factor VII A are undergoing phase III clinical trials, and the successive development and marketing of new varieties will provide a strong guarantee for the company's medium- to long-term development.
With the proposed acquisition of Wuhan Zhongyuan Reed, the company's comprehensive strength is expected to be further enhanced. On the evening of August 30, the company announced that Chengdu Rongsheng, a holding subsidiary of the company, plans to acquire 100% of the shares of Wuhan Zhongyuan Reed, a wholly-owned subsidiary of CSL Asia Pacific, for a total amount of 0.185 billion US dollars. After the transaction is completed, Zhongyuan Reed will become the company's controlling subsidiary and included in the scope of the company's consolidated financial statements. Zhongyuan Reed has 6 varieties and 13 product numbers, including albumin, static propylene, and special exemption. It has 5 plasma collection stations in Hubei Province. A total of 112.37 tons of plasma were collected in 2023. This transaction will help the company develop plasma resources and expand the scale of plasma collection and production; at the same time, CSL Group, as a leading international manufacturer of blood products, may deepen the cooperative relationship between the two parties, give full play to their respective resources and influence in the Chinese and international markets, and seek common development. The company's comprehensive competitive strength in the blood products industry is expected to further improve.
Investment advice: Buy-A investment rating, 6-month target price of 28.18 yuan. Without considering Zhongyuan Reed's combined expectations, we expect the company's revenue growth rates from 2024 to 2026 to be 18.4%, 18.0%, and 16.3%, respectively, with outstanding growth rates of 25.5%, 19.9%, and 16.7% respectively; maintaining the Buy-A investment rating, the target price for 6 months is 28.18 yuan, which is equivalent to a dynamic price-earnings ratio of 40 times that of 2024.
Risk warning: Product marketing and sales fall short of expectations, slurry source expansion falls short of expectations, new product development progress falls short of expectations, and acquisition progress falls short of expectations.