Performance was under pressure in the short term, and overseas market expansion achieved results. With 2024H1, the company achieved revenue of 0.144 billion yuan (YoY +18.4%), net profit attributable to mother 24.14 million yuan (YoY -36.3%), and net profit of 16.74 million yuan (YoY -43.5%) after deducting non-attributable net profit.

Looking at specific businesses, 2024H1 achieved product sales of 0.124 billion yuan (+59.7% YoY), with a gross profit margin of 70.34%, of which 2024Q1/Q2 achieved sales of 71.55/52.16 million yuan (+71.0%/+46.4%, respectively); CDMO services achieved revenue of 19.67 million yuan (-55.1% YoY), and gross profit margin of -4.52%. It is estimated that CDMO services are affected by the industry downturn, and revenue has declined markedly. At the same time, part of the costs in the trial production phase of the CDMO biopharmaceutical commercial production platform was affected by factors such as costs. Among them, 2024Q1/Q2 achieved sales of 8.05/11.62 million yuan respectively (-69.1%/-34.3% year-on-year, respectively, an improvement over the previous month).

By region, 2024H1 achieved domestic market revenue of 98.41 million yuan (-8.4% YoY), of which 2024Q1/Q2 was 46.9/51.51 million yuan (-27.0%/+19.4%, respectively); overseas market revenue was 45.2 million yuan (+226.6% YoY), of which 2024Q1/Q2 was 32.81/12.39 million yuan (+795.7%/+21.7%, respectively), and overseas Market expansion has paid off.

The number of product pipelines reached a record high. As of 2024H1, there are 216 drug development pipelines that have determined pilot processes using the company's cell culture medium products, including 127 in the pre-clinical stage, 34 in the Ph1 clinical stage, 29 in the Ph2 clinical stage, 21 in the Ph3 clinical stage, and 5 in the commercial production stage. Overall, 46 more than at the end of 2023.

Adjust the 2023 Stock Incentive Plan. The company announced the revised draft of the 2023 stock incentive plan and adjusted the performance assessment target. Target A (100% ownership coefficient) is based on 2023 revenue, and the 2024-2026 growth rate is not less than 20%/45%/75%, respectively (or Wind Life Science Tools and Services Index component stocks correspond to the average revenue growth rate for each year plus 10 percentage points, same below), and the corresponding revenue is not less than 0.292/0.352/0.425 billion, respectively; target B (80% attribution coefficient) The corresponding revenue target is based on 2023 revenue. The 2024-2026 growth rate is not less than 15%/35%/60%, respectively, and the corresponding revenue is not less than 0.279/0.328/0.389 billion yuan, respectively.

Investment advice: According to the company's 2024 semi-annual report, we adjusted the profit forecast. We expect revenue for 2024-2026 to be 0.309/0.414/0.521 billion yuan (previous value was 0.303/0.419/0.574 billion yuan), and net profit to mother is 0.06/0.113/0.149 billion yuan (previous value was 0.08/0.138/0.205 billion yuan). Currently, PE corresponding to the stock price is 49/26/ 20x, maintaining the “better than the market” rating.

Risk warning: risk of valuation, risk of profit forecasting, risk of product development falling short of expectations, risk of downstream customer product promotion falling short of expectations, etc.