Brief performance review

On the evening of October 29, the company released its 2024 three-quarter report. In the first three quarters, the company achieved operating income of 4.14 billion yuan (-35.14%), net profit of 0.71 billion yuan (-67.86%), and non-net profit deducted by mother of 0.663 billion yuan (-67.41%); in the third quarter, the company achieved operating income of 1.44 billion yuan (-18.09%) and net profit to mother 0.21 billion yuan (-59.68%). 0.215 billion yuan (-54.02%)

Management analysis

Continued improvement from month to month after eliminating large orders. In the third quarter of a single quarter, the company achieved revenue of 1.443 billion yuan, a year-on-year increase of 12.23% and a month-on-month increase of 11.21% after excluding the impact of large orders. Among them, the small-molecule business achieved revenue of 1.192 billion yuan, an increase of 18.89% year-on-year after excluding the impact of large orders, and an increase of 22.52% month-on-month. The improvement in the company's third quarter results began to show. In the first three quarters, the company achieved revenue of 4.14 billion yuan, a year-on-year increase of 4.48% after excluding large orders, and 3.387 billion yuan in small-molecule business revenue. After excluding large orders, the company achieved a year-on-year increase of 7.71%. In terms of emerging businesses, dragged down by the investment and financing environment, revenue of 0.745 billion yuan (-8.37%) was achieved in the first three quarters, and revenue of 2.45 (-13.26%) was achieved in the third quarter.

The decline in scale has brought pressure on the cost side. During the reporting period, due to the decline in the company's revenue scale, various expense ratios increased. Among them, the sales expense ratio was 4.04%, up 1.86 pct year on year; the management expense ratio was 12.92%, up 4.13 pct year on year; and the R&D cost ratio was 11.69%, up 3.65 pct year on year.

The peptide business is progressing smoothly. During the reporting period, the company obtained a number of MNC peptide mid- and late-stage clinical project orders, and signed commercialization orders for GLP-1 peptides with important domestic customers. By the end of the reporting period, the solid phase synthesis capacity of peptides had exceeded 0.02 million litres.

Profit Forecasts, Valuations, and Ratings

We expect that the company's net profit for 2024/2025/2026 will be 1.033/1.195/1.397 billion yuan, EPS will be 2.81/3.25/3.8 yuan, respectively, and the current PE valuation of the company's stock price will be 30/26/22 times, maintaining the “buy” rating.

Risk warning

The main innovative drug served is the risk of delisting or being recalled on a large scale, the risk of clinical-stage project operation, the risk of loss of core technical personnel, risk of policy change, exchange rate risk, etc.