Incident: The company released its 2024 three-quarter report, and achieved revenue of 0.73 billion yuan (+8.4%), net profit to mother of 0.27 billion yuan (+0.8%), and net profit of 0.26 billion yuan (+0.3%) after deducting non-return to mother net profit of 0.26 billion yuan (+0.3%) for the first three quarters of 24 years.

24Q3 dust mite drops are growing steadily. On a quarterly basis, the company achieved revenue of 0.22/0.21/0.3 billion yuan (+18.1%/+4.9%/+4.7%) in Q1/Q2/Q3 of 2024, respectively. Q3 revenue increased by about 41% month-on-month. The main reason is that the company's core product, dust mite drops, ushered in a peak sales season in the fall. Dust mite drops achieved revenue of about 0.29 billion yuan (+4.3%) in the third quarter. The Q3 revenue growth rate is expected to increase marginally. Artemisia artemisia drops achieved revenue of 20.57 million yuan (+87.5%) in the first three quarters. The company increased the promotion of artemisia artemisia drops in the northern market, and product revenue grew rapidly. Sales expenses/management expenses/R&D expenses for the first three quarters were 0.27/0.05/0.09 billion yuan, accounting for about 37.1%/7.2%/12% of revenue, +1.1 pp/+1.2 pp/+0.4 pp compared to the same period.

The application for clinical trial of the house dust mite membrane was accepted. In September 2024, the company announced that the application for clinical trial of the house dust mite membrane was accepted by the State Drug Administration. This product is used for allergic rhinitis associated with dust mite allergies. The administration method is sublingual administration. It has better dosing accuracy and better patient compliance. It is an upgraded product of the company's current leading product “dust mite drops”. If this product is successfully approved for marketing in the future, it is expected to enrich the company's anti-dust mite allergy product portfolio, better meet the diverse medication needs of patients, and reinforce the company's dominant position in the market.

Profit forecasting and investment advice. Net profit for 2024-2026 is expected to be 0.35 billion yuan, 0.43 billion yuan, and 0.5 billion yuan, respectively. The corresponding dynamic PE is 36 times, 29 times, and 25 times, respectively, maintaining the “buy” rating.

Risk warning: Risk of new patients falling short of expectations, risk of product development falling short of expectations, market competition increasing risk, industry policy risk.