Brief performance review

On October 24, 2024, the company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved revenue of 31.478 billion yuan, +4% year over year; realized net profit of 2.562 billion yuan, +17% year over year; realized net profit without return to mother of 2.482 billion yuan, +15% year over year.

In the third quarter of 2024, the company achieved revenue of 10.513 billion yuan, +5% year-on-year; realized net profit of 0.866 billion yuan, +15% year-on-year; realized net profit without deduction of 0.857 billion yuan, or +17% year-on-year.

Management analysis

The overall operation of all sectors is steady, and the positive growth trend continues. The company's overall operation in the pharmaceutical industry sector continued to maintain a steady and positive trend. In the first three quarters, it achieved operating income of 9.94 billion yuan (including CSO business), a year-on-year increase of 10.53%, achieving net profit of 2.14 billion yuan, an increase of 14.49%; in the third quarter, it achieved operating income of 3.243 billion yuan (including CSO business), which increased 10.32% year on year, and achieved net profit of 0.755 billion yuan over year, up 20.44% year on year. The overall operation of the pharmaceutical business showed a steady upward trend. In the first three quarters, it achieved a total revenue of 20.571 billion yuan, an increase of 1.38% over the previous year, and a cumulative net profit of 0.323 billion yuan, an increase of 2.09% over the previous year. The medical and aesthetic sector achieved a total revenue of 1.909 billion yuan in the first three quarters (excluding internal offsetting factors), an increase of 1.90% over the previous year; of these, Xinckley Aesthetics revenue was 0.909 billion yuan, an increase of 10.31% year on year, and profitability continued to improve. The international market expansion of the industrial microbiology sector continues to make positive progress, and the overall sales trend continues to improve. The total sales revenue for the first three quarters was 0.443 billion yuan, an increase of 30.17% over the previous year.

R&D progress is being actively promoted, which is expected to contribute to increased performance. The company's innovative research and development focuses on the three major fields of endocrinology, autoimmunity and oncology. Currently, the innovative product pipeline has more than 70 items.

Among them, companies in the field of oncology have established a pipeline covering more than 30 innovative oncology drug products, including targeted small molecule chemicals, ADC, antibodies, and PROTAC. The application for marketing licensing of somituximab injection, the world's first new ADC drug, for platinum-resistant ovarian cancer, in China is currently in the comprehensive review stage. In the field of endocrinology, the company's oral small molecule GLP-1 receptor agonist HDM1002 has completed phase II clinical enrollment for weight management indications for overweight or obese people, and the diabetes indication for simeglutide injection has completed phase III clinical study enrollment. In the field of self-immunization, the Chinese marketing applications for injectable linacip for the treatment of cold-pyridine-related periodic syndrome (CAPS) and recurrent pericarditis (RP) are all under review.

Profit Forecasts, Valuations, and Ratings

We maintain our profit forecast for 2024-2026, and expect the company to achieve net profit of 3.36 billion yuan (+18%), 3.94 billion yuan (+17%), and 4.57 billion yuan (+16%), respectively. In 2024-2026, the company's corresponding EPS was 1.92, 2.25, and 2.61 yuan, respectively, and the corresponding PE was 18, 15, and 13 times, respectively. Maintain a “buy” rating.

Risk warning

Product development progress falls short of expectations; risk of net interest rate decline due to increased competition in the product market; risk of falling short of expectations in market promotion, etc.