风险提示：产品价格恢复及产能爬坡不及预期风险、行业政策变化风险、汇率波动风险、原材料价格波动风险等。The pharmaceutical raw materials sector is growing steadily, and Dongbao APIs are expected to contribute a large amount of performance. Flexible companies are deeply involved in the pharmaceutical raw materials and intermediates business and strategically expand the animal protection APIs business. With the company's ability to develop a wide variety of products, we will gradually expand and strengthen core products in the field of animal insurance. Affected by stable prices of raw materials such as erythromycin thiocyanate, the price of macrolide APIs remained stable. Driven by increased demand, the company's sales volume of macrolide APIs maintained a relatively rapid growth rate. Prices of intermediates such as sodium borohydride have stabilized at the bottom, and the company's market share is high, which is expected to contribute to some performance elasticity. Animal protection APIs are at the end of supply, and industry demand is recovering. It is expected that in the next few years, animal protection APIs are expected to contribute greatly to performance flexibility. We are optimistic about the long-term development of the company. We expect net profit to be 0.798/0.995/1.235 billion yuan in 2024-2026. The current stock price corresponds to PE 13.9/11.2/9.0 times. The valuation is cost-effective. It is covered for the first time, giving it a “buy” rating.
Macrolide API prices remained high, and sales grew steadily. The company's pharmaceutical raw materials sector maintained relatively rapid growth, from 1.25 billion yuan in 2017 to 2.217 billion yuan in 2023. The compound growth rate was 10.02%. The gross margin stabilized at more than 20%, and the gross margin in 2023 was 21.7%. Demand for macrolide APIs is good, supported by the cost side, and prices remain high. Furthermore, the company is rapidly releasing new varieties such as moxifloxacin, and the specialty APIs sector is expected to contribute to some of the performance elasticity. Affected by the COVID-19 pandemic, the company's intermediate sector performance has fluctuated in recent years. Prices of intermediate products are at the bottom in 2023 and 2024. As the company's production capacity is released and demand grows, the market share is expected to increase further.
The Animal Protection API business has entered a new upward cycle. It is expected to contribute a lot to performance. Flexible companies have focused on the Animal Protection API business in recent years. Affected by oversupply and sluggish demand, product prices have continued to decline. The company's production capacity is growing rapidly, and its market share is rising rapidly. Demand in the industry grew in 2024, and the supply side was in the final stages. The field of animal protection APIs ushered in a clear recovery. The price index of veterinary medicine raw materials continued to rise. Among them, the price of doxycycline rebounded markedly, the price of fluphenicol rose moderately, and the prices of products such as telmicosin, telomectin, and tylosin rose significantly. It is expected that the upward cycle of Dongbao API prices in the next few years is expected to drive a significant increase in the company's performance.
Risk warning: Risk of product price recovery and production capacity falling short of expectations, risk of changes in industry policies, risk of exchange rate fluctuations, risk of raw material price fluctuations, etc.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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