According to a research report released by BOC International, China Biopharmaceutical (01177)'s 3Q24 revenue increased 14.3% year over year to 5.47 billion yuan (RMB, same below), and adjusted net profit increased 58.0% to 0.6 billion yuan, all exceeding the forecast. Management maintains the double-digit revenue growth guide for the whole year. In addition, the company acquired control of Haobo (688656.SH) and entered the immunological diagnosis circuit at a purchase price of 33.74 yuan/share. After completion, Haoubo will become the first subsidiary of China Biopharmaceutical to be listed on A-shares. The bank believes that its product portfolio will form a good synergy with the development of the company's follow-up pipelines in the fields of respiratory and self-prevention diseases.

The main views of JBC International are as follows:

3Q24 surpassed expectations, reaffirmed full-year guidance, and further clarified the growth path next year:

Excluding discontinued operations, 3Q24's revenue increased 14.3% year-on-year to 5.47 billion yuan (RMB, same below), thanks to the rapid release of new/sub-new products such as biosimilar drugs and elisu, as well as improved recovery of overall hospital-side activities after normalization of industry regulation; adjusted net profit increased 58.0% to 0.6 billion yuan. Revenue and net profit both surpassed the bank's expectations. Management maintains double-digit revenue growth guidelines for the whole year. Sales expectations for specific products in 2024 include: Overall biosimilar products will reach 2 billion yuan (vs. 0.5 billion yuan last year), of which bevazol is 0.7-0.8 billion yuan and trastuzu is about 0.5 billion yuan; Elishu is expected to exceed 0.5 billion yuan. In 2025, newly launched varieties will contribute more revenue growth: the first imitation of pertuzol is expected to exceed 0.8 billion yuan in the first year of listing; KRAS introduced from Yifang Biotech has passed the CDE review and is about to be officially approved. The approval period is earlier than previously anticipated in early 2025.

Acquire control of Haobo (688656.SH) and enter the immunological diagnosis circuit:

The company announced an official offer to acquire up to 55.00% of Haobo's shares, including: 1) Beijing Runkang, a wholly-owned subsidiary of the company, has agreed to acquire 29.99% of the shares; 2) After the above share transfer, Shuangrun Zhengan, a non-wholly-owned subsidiary holding 51.02% of the shares of the company, will submit a takeover offer to other shareholders of Haobo to acquire up to 25.01% of Haobo's shares. Among them, the two major shareholders of Haobo have promised to accept an offer relating to 23.01% of Haobo's shares (that is, after the offer is completed, the company will hold at least 53.00% of Haobo's shares and obtain Hao Oubo's shares Ober's control). The purchase price was 33.74 yuan/share, which is a 5% premium compared to the closing price of Hao Oubo on the last trading day before the suspension of trading. Haoubo is located in Suzhou Industrial Park. Its business focuses on the field of immunological in vitro diagnosis, and has two major product lines; revenue and deducted non-net profit in 2023 reached 0.394 billion/4 and 3.3 million yuan, respectively, +23%/+17% year-on-year. At the same time, the original shareholders of Haoubo promised not less than 4, 5.47 million/4, 7.74 million/5, 0.13 million yuan, corresponding to at least 5% 2023-26 CAGR After the acquisition is completed, Haoubo will become the first subsidiary of China Biopharmaceutical to be listed on A-shares. The bank believes that its product portfolio will form a good synergy with the development of the company's follow-up pipelines in the fields of respiratory and self-protection diseases.