Recommended logic: 1) Overall performance maintained steady growth, revenue structure continued to be optimized, chemical formulation revenue reached 52.9% in 2023, and profitability continued to increase; 2) Continued implementation of new products contributed to increased performance. Triprirelin acetate microspheres (1-month sustained release) were approved for marketing in 2023, injectable aripiprazole microspheres and simeglutide have been declared for listing; 3) Continued expansion of the biopharmaceutical market. Tocilizumab analogues have been approved for marketing, and IL17A/F monoclonal antibodies are in phase III clinical stage.

Performance has grown steadily, revenue structure continues to be optimized, and profitability continues to improve. As an established pharmaceutical company, the company has formed a situation where multiple businesses such as Western medicine preparations, APIs, diagnostic reagents, and traditional Chinese medicine are developing together. The company's business structure continues to be optimized, and the share of the highly profitable formulation business continues to increase. The share of chemical formulation revenue reached 52.86% in 2023. The API, diagnostic reagents and equipment sector is developing steadily, and the Chinese medicine sector is expected to maintain steady growth. Profitability continued to increase, with gross margin increasing from 55.8% in 2011 to 66% in the first half of 2024, and net profit margin increasing from 12.3% in 2011 to 21.6% in the first half of 2024.

Continued implementation of new products contributed to increased performance. Triprarelin acetate microspheres (1-month sustained release) were approved for marketing in 2023, and injectable aripiprazole microspheres and simeglutide were declared for marketing in May 2023 and June 2024, respectively, and are potential single products. Overall, the company's main products have maintained steady growth, and new products have been approved for marketing. The Western medicine formulation sector is expected to achieve 6.7%, 10%, and 13% year-on-year growth rates in 2024-2026.

R&D continues to advance, expanding the room for long-term growth in performance. In 2023, the company's R&D investment accounted for 10% of revenue. It has strong R&D strength, leading technology in the field of microspheres. The marketed product leuprorelin microspheres has continued to be released. Triprorelin acetate microspheres will be approved for marketing in 2023, and the products under development, such as aripiprazole microspheres, are highly competitive and have large market space, and are expected to drive performance growth after launch. In addition, the company continues to develop in the field of biopharmaceuticals. Drugs similar to tocilizumab have been approved for marketing, simeglutide has been declared for listing, and IL17A/F monoclonal antibodies are in phase III clinical stage, which is expected to contribute significantly to increased performance. Currently, the company is developing a wealth of products, and is expected to drive long-term growth in performance after gradual listing in the future.

Profit forecast: The company's net profit for 2024-2026 is estimated to be 2.21, 2.51, and 2.81 billion yuan, respectively.

The company's business structure continues to be optimized, and the products under development are gradually entering the harvesting stage, and the performance is expected to enter a stage of accelerated growth.

Risk warning: risk of innovation and development falling short of expectations, risk of new product marketization falling short of expectations, drug price reduction risk, pharmaceutical industry policy risk.