[Key points of investment]

There are many types of R&D pipelines, and they are gradually entering the harvest period. The company's products are mainly bioinnovative drugs and bioanalogues. The number of drugs under development is as high as 24, covering many popular targets. One of these products, gleryl (adalimumab antibiotic analogue), was marketed and sold at the beginning of the year. Two products (bartifaban BAT2094 and bevacizumab analog BAT1706) have submitted marketing applications and were accepted. Three products are in clinical phase III, and many others are in early clinical and preclinical research stages.

The products cover the field of major diseases, and the market space is large. The company's many late-clinical products cover various treatment fields such as tumors, autoimmune diseases, cardiovascular diseases, etc. Bevacizumab analogs in the field of oncology have submitted marketing applications and have been approved. The anti-HER2 ADC drug BAT8001 is in clinical phase III, with sales expected to reach 971 million yuan and 1,229 million yuan respectively in 2029; the tocilizumab analog BAT1806 in the autoimmune field and BAT2506, the world's first golimumab analog, are in clinical phase III, with sales expected to reach 2,014 million yuan and 362 million yuan respectively in 2029; cardiovascular disease Bartifaban in the field is PCI perioperative antithrombotic agent. A marketing application has been submitted and approved, and sales are expected to reach 135 million yuan in 2029.

Self-sales and channel distribution are combined to promote product commercialization. The first product, Gleryl, is the first batch of adalimumab analogues in China and has been marketed for sale. The company adopted a self-selling model and formed a marketing team. Sales have already exceeded 100 million in the three quarters, and future sales are worth looking forward to. For the bevacizumab analog BAT1706, the company signed cooperation agreements with BeiGene, Cipla Limited and Biomm to promote the product to domestic and foreign markets using external resources. For BAT2506, the world's first golimumab antibiotic analog to enter clinical phase III, the company signed an agreement with Pharmapark LLC to cooperate in sales in Russia and other CIS countries to expand overseas markets.

[Investment advice]

As a leading biopharmaceutical company in China, the product pipeline is rich and reasonable in layout, covering many popular targets and diseases in many major fields. The R&D progress of many key varieties is in the first tier, and is now gradually entering the harvest period. The company is based at home, targets the global market, and uses a combination of self-sales and distribution methods to expand domestic and foreign markets for its products.

We expect the company's revenue for 2020/2021/2022 to be 269/996/1,805 million yuan respectively, net profit of -477/-0.77/320 million respectively, and EPS is -1.15/-0.19/0.77 yuan respectively. Based on DCF valuation and PS valuation, after conversion, we think the company's total market value is about 14.8 billion yuan, giving it an “increase in holdings” rating.

[Risk Reminder]

Risk of uncertainty in drug development;

The progress of drug marketing is falling short of expectations;

Competition for competitive products increases risk;

Continued risk of unprofitability;