Incident: The company announced its 2024 three-quarter report. 2024Q1-Q3 revenue was 103.88 yuan/ -2.75%, net profit to mother was 2.789 billion yuan/ -22.80%, after deducting non-return net profit of 2.841 billion yuan/ -21.45%. Among them, 24Q3 revenue was 3.749 billion yuan/ -16.94%, net profit attributable to mother was 1.069 billion yuan/ -26.37%, and net profit not attributable to mother was 1.103 billion yuan/ -24.02%.

Jinsai and Huakang have steady earnings, and 100g is under pressure. 2024Q1-Q3, Jinsai Pharmaceutical achieved revenue of 8.163 billion yuan/ +0.55%, net profit of 2.839 billion yuan/ -19.45%. The profit side was under pressure mainly due to cost increases due to adjustments to the new BU management structure and increased R&D investment; Baike Biotech achieved revenue of 1.026 billion yuan/ -17.47%, and net profit of 0.244 billion yuan/ -26.19%, putting pressure on performance; Huakang Pharmaceutical achieved revenue of 0.572 billion yuan /+11.01%, net profit attributable to mother 0.035 billion yuan/ +26.16%; Gaoxin Real Estate achieved revenue of 0.591 billion yuan/ -23.70%, and net profit attributable to mother 0.038 billion yuan/ -49.80%.

Insist on investing in R&D and continuing to promote innovation, and have sufficient momentum for long-term growth. In the first three quarters of this year, the company spent 1.41 billion yuan/ +20.84% on R&D, and the R&D expenditure rate reached 13.57% /+2.65pcts. The company accelerated research and development of new products. Applications for products such as recombinant human follicle-stimulating hormone injections and progesterone injections (II) were approved, and applications for marketing of products such as injectable kinazumab (powder), injectable triprorelin acetate microspheres, recombinant human follicle-stimulating hormone-CTP fusion protein injections, live attenuated nasal spray influenza vaccine (liquid formulation), and tibolone tablets were accepted one after another. In terms of innovative genetically-engineered pharmaceuticals, the subsidiary Jinsai Pharmaceutical is steadily promoting sales management in the core pediatric business segment, increasing the market's acceptance of the efficacy and safety of long-term growth hormone, accelerating the application of growth hormone in assisted reproduction and adult growth hormone deficiency, continuously expanding its product line, and launching new products such as Meshya and Jinshuwen one after another. In October of this year, Jinsai Pharmaceutical's marketed product was approved by the NMPA to increase the 6IU standard of human growth hormone for injectable use, and in August, the new specification for long-acting growth hormone (for growth disorders in girls caused by gonadal hypoplasia) was approved by the NMPA.

Investment advice: The company's 2024/2025/2026 EPS is expected to be 9.64/10.67/11.34 yuan, respectively.

The company has a rich research pipeline, actively promotes the development and launch of new products, and maintains an “increase” rating.

Risk warning: risk of policy change, risk of new drug development, risk of talent integration.