Incident Overview

The company announced its 2024 three-quarter report: In the first three quarters of 24, it achieved operating income of 2.125 billion yuan, a year-on-year decrease of 30.02%, realized net profit to mother of -0.206 billion yuan, a year-on-year decrease of 145.68%, and realized deduction of non-net profit of -0.213 billion yuan, a year-on-year decrease of 149.58%.

Among them, 24Q3 achieved revenue of 0.773 billion yuan in a single quarter, a year-on-year increase of 10.73%, realized net profit to mother of -0.036 billion yuan, a year-on-year decrease of 187.72%, and realized deduction of non-net profit of -0.039 billion yuan, a year-on-year decrease of 211.61%.

Analytical judgment:

Revenue showed a month-on-month improvement. In-hand orders showed a year-on-month increase of more than 40%. The company achieved revenue of 0.773 billion yuan in 24Q3, up 29% year on year after excluding large orders, and showed an improving trend compared to 24H1. By business segment, the small molecule API CDMO business achieved revenue of 0.717 billion yuan, up 29% year on year after excluding large orders, and showing improvement over 24H1. Considering the 40% + year-on-year increase in orders in the company's small molecule API CDMO business as of the end of 24Q3, looking ahead to the next few quarters, the revenue side is expected to show a month-on-month improvement trend.

Profitability showed a month-on-month increase, and the profit of the small molecule API CDMO business showed a positive change in the 24Q3 single quarter

The company's 24Q3 gross margin was 31%, up about 9 percentage points from the previous month. Among them, the gross margin of overseas customer revenue was close to 40%. Looking forward to the future, as capacity utilization continues to increase, profitability is expected to increase marginally. The company achieved net profit of -0.036 billion yuan to mother in 24Q3. If the impact of the new business (formulation business, gene cell therapy business, and ADC business) was excluded, the main small molecule API business achieved profit of 0.023 billion yuan and corrected in the 24Q3 single quarter. Looking forward to the future, along with the increase in capacity utilization and reduction in new business losses, profitability is expected to increase month-on-month.

Investment advice

Taking into account the impact of factors such as weakening global investment and financing, the profit forecast for the previous period was adjusted, that is, 24-26 revenue was adjusted from 2.847/3.437/4.099 billion yuan to 2.904/3.503/4.174 billion yuan, and EPS was adjusted from -0.41/0.34/0.68 yuan to -0.37/0.44/0.78 yuan, corresponding to the closing price of 15.64 yuan/share on October 24, 2024, PE was -42/36/20 times, respectively, In the medium to long term, the company's performance is expected to improve marginally and maintain a “buy” rating.

Risk warning

Risk of loss of core technical backbone and management, risk of increased competition, risk of loss of core technical personnel, risk of exchange rate fluctuations