occurrences

The company released its three-quarter report for 2024: In the first three quarters of 2024, the company achieved revenue of 3.001 billion yuan, a year-on-year increase of 22.18%, and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss of 0.497 billion yuan, an increase of 14.94% year-on-year. In the third quarter of 2024, the company's main revenue in a single quarter was 0.958 billion yuan, up 24.15% year on year; net profit to mother for the single quarter was 0.166 billion yuan, up 17.01% year on year; after deducting non-net profit of 0.164 billion yuan, up 30.87% year on year.

Comment:

The company's performance improved markedly in the 3rd quarter. As the company's innovative products and Xinlitai brand were recognized and accepted by doctors and patients, and the continuous enrichment of the product line, the revenue and profit contribution of innovative products continued to increase. At the same time, generic drugs purchased in volume maintained a steady revenue contribution, achieving good revenue and profit growth.

In terms of the company's innovative drugs, R&D projects are progressing in an orderly manner. Phase III research projects such as S086 (chronic heart failure), SAL0130, and SAL003 are progressing smoothly, and S086 (hypertension), SAL0108, SAL056, and enaldostal (hemodialysis and abdominal diarrhoea), which have been applied for marketing, are progressing normally and in an orderly manner. Enalastat (CIA) phase II has completed the first enrollment, SAL0112 (type 2 diabetes) phase II clinical enrollment has completed the first case, SAL0120 (hypertension) has initiated patient enrollment screening for phase II clinical trials, and CKD indications are undergoing preparations for phase II clinical enrollment.

Investment advice

Considering changes in the company's sales structure and the succession of new products approved for listing, the future release of innovative products can be expected, maintaining the previous profit forecast. That is, we expect Xinlitai's revenue for 2024-2026 to be 4/4.73/5.82 billion yuan, up 18.9%/18.3%/22.9% year on year, and net profit to mother of 0.62/0.76/0.96 billion yuan, respectively, up 6.6%/22.6%/26.4%. EPS is 0.55/0.68/0.86 yuan, respectively. Corresponding to the closing price of 32.81 yuan/share on October 25, 2024, PE was 59/48/38 X, respectively. Maintain a “buy” rating.

Risk warning

New drug development fell short of expectations, market competition intensified, commercialization performance fell short of expectations after product launch, and the impact of winning bids and price reductions.