occurrences

On October 30, Minovar announced its results for the third quarter of 2024: the company achieved operating income of 0.949 billion yuan (yoy +2.21%) in 24Q1-Q3, net profit of 0.063 billion yuan (yoy +15.97%), deducting non-net profit of 0.052 billion yuan (yoy -1.15%);

24Q3 achieved operating income of 0.341 billion yuan (yoy -1.46%), net profit of 0.044 billion yuan (yoy +87.08%), and non-net profit of 0.033 billion yuan (yoy +20.04%) in a single quarter; the company's Q3 performance was good, mainly due to the smooth rise in production capacity of Minohuatiankang's pharmaceutical processing business, which led to an increase in overall performance.

The pharmaceutical processing business has begun to gain strength. The expected output is optimistic in 2025. After Minovar Tiankang's “3 billion tablet (tablet) export solid preparation construction project” was fully put into use, the company's pharmaceutical processing business grew significantly, driving the overall revenue and gross margin growth. 2024Q3's gross margin was 36.09%, 24Q2 was 24.39%, up 11.70pct from month to month.

The assembly of the small package production line affected the company's Q1-Q2 delivery pace to major customers in '24. The Q3 production line ran smoothly and completed the volume. Currently, production is at full capacity. The company expects the formulation processing business to continue to accelerate release in the fourth quarter of 2024. Furthermore, judging from the projected production volume in 2025, the formulation processing business is expected to achieve considerable growth.

Cooperation with major customers continues to deepen to provide stable long-term performance growth

Minovar has established in-depth cooperation between CDMO and MSD. The development and verification production of 9 products in the first phase of the MSD project is progressing normally, and development work has already begun on all 3 products signed in the second phase.

In addition, the company cooperated with Sun Pharma (the largest pharmaceutical company in India and the fourth largest generic drug company in the world) in the fields of statin lipid-lowering drugs, and successfully passed customer quality audits and entered the qualified supplier directory. The two sides will further expand and deepen product cooperation in chronic diseases such as cardiovascular and diabetes, and sales in India and other markets are steadily increasing.

Considering that cooperation with MSD and Sun Pharma has begun to bear fruit, in-depth cooperation with major customers is expected to bring continuous orders and long-term benefits to Minovar.

Profit Forecasts and Investment Ratings

As the company's formulation processing business began to gain strength in the third quarter of 2024 and the company achieved good performance growth in the third quarter, we raised the company's operating income to 1.481/1.87/2.298 billion yuan in 2024-2026 (previous value was 1.463/1.859/2.263 billion yuan), and net profit to mother was 0.94/0.207/0.255 billion yuan (previous value was 0.078/0.181/0.224 billion yuan) to maintain the “increase in holdings” ” Ratings.

Risk warning: risk of exchange rate fluctuations, risk of raw material supply and price increases, risk of market competition, risk of depreciation of fixed assets, risk of product development falling short of expectations, product quality control risk