Introduction to this report:

The company's shortfall in collection has gradually cleared up, and the inflection point of reversing the loss in performance has arrived. Innovation and transformation have entered the harvest period. ASKB589 is expected to lead the iteration of drug use in the field of gastric cancer, and there are sufficient reserves in the research pipeline in the future. Covered for the first time, a “gain” rating was given.

Key points of investment:

Covered for the first time, an increase in holdings rating is given. The company has a rich heritage, emulation, and innovation and transformation has entered a period of harvest. The company's EPS for 2024-2026 is predicted to be 0.12/0.22/0.31 yuan, respectively. Combining the absolute valuation method and the relative valuation method, the target price was 14.66 yuan. Covered for the first time, a “gain” rating was given.

Gathering gaps have gradually cleared up, and the inflection point of reversing the loss in performance has arrived. Affected by the collection of generic drugs such as PPI preparations (in particular, the core product omeprazole was bid for in the 7th round), the performance of the company's generic drug sector has been under pressure in recent years. The company actively adjusted its product structure and continued to promote the launch of new generic drugs. The share of digestive drugs in revenue declined markedly, and the share of anti-tumor, anti-infective and chronic disease drugs continued to increase; at the same time, various new generic drugs were launched one after another, leading to an increase in performance. 2024H1's revenue has resumed positive growth, the profit side has reversed losses, and the inflection point in performance has arrived.

Innovative transformation has entered a harvest period, and ASKB589 is expected to lead the iteration of drug use in the field of gastric cancer. The company focuses on innovative drugs targeting small molecules and innovative cancer immunobiology drugs, and many innovative drugs with differentiated competitive advantages have entered the harvest period one after another. Among them, CLDN18.2 monoclonal antibody ASKB589 is currently in phase III clinical phase, and progress is in the first tier in China. Compared with the world's first CLDN18.2 monoclonal antibody, zotuximab, it has differentiated advantages in molecular structure, and the registered clinical plan uses a triple design combining PD-1 monoclonal antibodies and chemotherapy (zotuximab is a dual scheme without immunity), leading drug iterations in the field of first-line gastric cancer. Furthermore, the EGFR-TKI product ASK120067 is already in the NDA stage, and the effects are similar to similar products as a whole; ASKC109, a new generation oral iron supplement, is in phase III clinical stage, has few side effects and high bioavailability, and has significant advantages over existing clinical products.

The research pipeline is well-stocked, and the exclusive technology platform is expected to bring about new breakthroughs in cytokine drugs.

The company's various models have entered the clinical verification stage one after another in the research pipeline. Among them, the fastest progress includes VEGFA/ANG2 double antibody ASKG712, which is the second most advanced in the world, and ASK0912, a new generation cyclic peptide anti-infective drug. The company established an exclusive masking peptide technology platform, bringing about a breakthrough in cytokine pharmacogenicity through prodrug technology. The IL-15 prodrug ASKG315 and PD-1/IL-15 prodrug fusion protein ASKG915 have excellent pre-clinical data for targeted tumor treatment. They have entered clinical trials and are potential global first-in-class drugs.

Risk warning. Risk of price reduction in collection; risk of clinical trial progress falling short of expectations; risk of falling short of expectations in marketing and sales.