The company released the 2024 three-quarter report: In the first three quarters of 2024, it achieved operating income of 4.073 billion yuan, net profit to mother of 1.052 billion yuan, and net profit of non-return to mother of 1.044 billion yuan, with year-on-year increases of 1.28%, 18.52%, and 18.68%, respectively. The third quarter of 2024 achieved operating income of 1.232 billion yuan, net profit to mother of 0.326 billion yuan, and net profit of non-return to mother of 0.32 billion yuan, a year-on-year decrease of 7.44%, an increase of 1.57%, and an increase of 0.04%, respectively.

Profitability has improved, and cost control has been effective. 2024Q3's gross margin and net margin were 54.54% and 35.87%, respectively, up 2.76pct and 3.31pct year-on-year, respectively. We think it may mainly benefit from: ① changes in product structure, factor products account for an increase in revenue; ② increased production efficiency, with the commissioning and operation of the Chengdu Rongsheng Yong'an factory, further improving product production efficiency, which also contributed to the increase in gross margin; ③ Effective control of expenses. The 2024 Q3 sales expense ratio, management expense ratio, and R&D expense ratio were 0.74% and 9.14%, respectively , 2.41%, -2.7pct, +0.58pct, -0.03pct year-on-year.

The amount of plasma collected has increased steadily, and the expansion of license licenses has helped open up “plasma” sources. ① Endogenous: As of 2024, the company reported a total of 102 single plasma collection stations (including sub-stations), of which 80 were in operation, spread across 16 provinces/autonomous regions across the country. 2024H1 collected 1,294 tons of plasma, an increase of 15% over the first half of 2023. ② Extension: The company has sufficient license resources. Following the four major blood systems and the return of Xi'an to Tiantian, the company announced in August 2024 that the holding subsidiary Chengdu Rongsheng plans to acquire 100% of the shares of Wuhan Zhongyuan Reed, a wholly-owned subsidiary of CSL Asia Pacific, for 1.126 billion yuan. Zhongyuan Reed has 13 product numbers, and has 5 campers in Hubei Province to collect 112.37 tons of plasma in 2023. After the merger and acquisition is completed, in addition to directly adding new pulp stations, the new license will help the company to further expand pulp station resources during the 15th Five-Year Plan period.

There is still room for improvement in the efficiency of tons of plasma: ① New products and ongoing research pipelines: in October 2024, Lanzhou Blood PCC was approved and passed the GMP compliance test; in the same month, Guizhou Blood System PCC officially launched phase III clinical trials; in September 2024, Chengdu Rongsheng High Concentration Isopropyl was approved for clinical use with new indications (chronic inflammatory demyelinating polyradiculoneuropathy); ② New production capacity is being invested one after another: In addition to the Rongsheng Yongan base, the Shanghai Blood Products Yunnan Project and Lanzhou New Blood System Production Capacity are also successive In progress; ③ Export: The company is steadily advancing the international market development of new products With preparations for registration, products such as human immunoglobulin for tetanus, intravenous human immunoglobulin (pH4), and human immunoglobulin for hepatitis B have been exported.

Investment advice and profit forecast: We believe Tiantan Biotech has industry-leading plasma resources, and the new plasma station+new product+new production capacity resonates to drive growth. Since there is generally a cycle of about 3 quarters from pulp harvesting to revenue recognition, considering factors such as the company's slurry volume growth in recent years, new product market education time, depreciation, etc., it is estimated that 2024-2026 will achieve a net profit of 1.349/1.599/1.874 billion yuan, corresponding to a price-earnings ratio of 33/28/24 times, maintaining a “highly recommended” rating.

Risk warning: Increased competition, price fluctuations, new product promotion falling short of expectations, slurry harvesting falling short of expectations, etc.