The company released its 2024 three-quarter report. In Q1-Q3 of 2024, the company achieved operating income of 31.478 billion yuan, a year-on-year increase of 3.56%, and realized net profit to mother of 2.562 billion yuan, an increase of 17.05% over the previous year. The company's medical and aesthetic business is under overall pressure in overseas markets, but revenue in the domestic market has maintained steady growth. Maintain a buy rating.

Key points to support ratings

Performance has maintained steady growth, and the pharmaceutical industry and pharmaceutical business sector have continued to improve. The company achieved operating income of 31.478 billion yuan in Q1-Q3 of 2024, an increase of 3.56% year on year, and realized net profit to mother of 2.562 billion yuan, an increase of 17.05% year on year. Among them, in the 2024 Q3 single quarter, the company achieved operating income of 10.513 billion yuan, a year-on-year increase of 5.03%; net profit to mother was 0.866 billion yuan, an increase of 14.71% year-on-year.

The company's pharmaceutical industry sector achieved operating income of 9.941 billion yuan in Q1-Q3 of 2024, an increase of 10.53% over the previous year, and achieved net profit of 2.14 billion yuan to mother, an increase of 14.49% over the previous year. The pharmaceutical business sector achieved revenue of 20.571 billion yuan in 2024Q1-Q3, up 1.38% year on year, and achieved net profit of 0.323 billion yuan, up 2.09% year on year

The medical and aesthetic sector has maintained positive growth as a whole, and the domestic medical and aesthetic business is growing steadily. In 2024, Q1-Q3, the company achieved revenue of 1.909 billion yuan (excluding internal offsetting factors), an increase of 1.90% over the previous year. The company's wholly-owned subsidiary Sinclair in the UK was affected by factors such as weak global economic growth, and achieved operating income of approximately 0.776 billion yuan in Q1-Q3 of 2024, a year-on-year decrease of 20.30%. Hinkley Aesthetics, a wholly-owned domestic medical and aesthetic subsidiary, achieved revenue of 0.909 billion yuan in Q1-Q3 2024, an increase of 10.31% over the previous year, and continuous improvement in profitability. In the future, the company will continue to promote the registration of core products and coverage of key potential global markets. As the company's core product pipeline is gradually listed in key overseas markets, the overseas medical and aesthetic market is expected to provide a continuous new impetus for the growth of the company's medical and aesthetic performance.

Insist on investment in R&D, and continue to advance the innovation pipeline. In 2024, Q1-Q3 invested 1.607 billion yuan in R&D in the pharmaceutical industry, of which direct R&D expenditure was 1.149 billion yuan. Direct R&D expenditure accounted for 11.69% of the pharmaceutical industry's revenue. The company's innovative research and development focuses on the three major fields of endocrinology, autoimmunity and oncology, and has a pipeline of over 70 innovative products. HDM1002, an oral small molecule GLP-1 receptor agonist independently developed by the company, has completed all phase II clinical studies of weight management indications for overweight or obese people. Pre-III communication is expected in Q4 2024.

valuations

The company's net profit for 2024, 2025, and 2026 is expected to be 3.447 billion yuan, 4.113 billion yuan, and 4.975 billion yuan, respectively, and the corresponding EPS is 1.96 yuan, 2.34 yuan and 2.84 yuan, respectively. The price-earnings ratios corresponding to the stock price on October 24, 2024 are 17.2 times, 14.4 times, and 11.9 times, respectively. Maintain a buy rating.

The main risks faced by ratings

Risk of product sales falling short of expectations, risk of product launch failure, risk of changes in industry policies.