Key points of investment:

Incident: The company released its 2024 three-quarter report, and the results were in line with expectations.

24Q1-3's revenue was 0.939 billion yuan (+28.6%), net profit due to mother 0.233 billion yuan (+42.2%), net profit not attributable to mother 0.217 billion yuan (+44.5%).

Q3 revenue was 0.343 billion yuan (+35.6%), and net profit to mother was 0.104 billion yuan (+49.7%). Growth was steady and in line with expectations.

Listed products are growing steadily, and R&D investment is increasing and the cost rate is maintaining a healthy level.

The company's Q1-3 main product revenue was 0.778 billion yuan, up 19.34% year-on-year. By product, we expect that there will be price reduction pressure on the expansion of Exaipu collection, and that pre-filled injections will improve patient compliance and drive steady growth; admission of cyptine and genippe is expected to continue to advance and maintain a high growth rate.

In terms of cost ratio: Q1-3 Sales/management/R&D expenses ratio is 16.4%/6.3%/31.1%.

The company invested a total of 0.354 billion yuan, +54.1%, of which R&D expenses were +41.5% compared to the same period, and the R&D expenses rate remained at a reasonable and healthy level.

The self-reliance R&D pipeline is being promoted efficiently and in an orderly manner.

As of 24Q3, the company is progressing in the R&D pipeline to maintain high efficiency. The key updates are as follows:

608: Phase III clinical trials for moderate to severe plaque psoriasis were completed; the remaining two major indications progressed rapidly to phase II.

610: Enrolled in stage 3 for severe eosinophilic asthma.

611: Moderate to severe AD phase III enrollment completed.

613: Acute gout arthritis phase 3 enrollment completed; intermittent indication phase 2 enrollment completed.

626: SLE and CLE obtain US IND approval.

Profit forecasting and investment advice

The company's performance has maintained steady growth, strong R&D execution, and steady progress. We believe the overall performance is in line with expectations. The company received dividends from participating companies in '24, which is expected to increase overall profit performance and drive overall earnings improvement. The company's net profit to mother is expected to be 0.7/0.27/0.34 billion yuan in 2024-2026 (previous value: 0.25/0.24/0.31 billion yuan), maintaining a “buy” rating.

Risk warning

New product development risk, risk of new drug development demand falling short of expectations, risk of overseas market development falling short of expectations, risk of increased market competition, risk of changes in government subsidy policies