Recently, Ganli Pharmaceutical released its 2020 annual report. During the reporting period, the company achieved operating income of 3,362 billion yuan, an increase of 16.12% over the previous year; achieved net profit of 1,231 billion yuan, an increase of 5.43% over the previous year; achieved net profit of 1,255 million yuan after deducting non-return mothers, an increase of 9.05% over the previous year; and realized net cash flow from operating activities of 1,241 million yuan, an increase of 7.23% over the previous year.

Profit prediction and rating: As the first Chinese company to successfully develop, produce and industrialize recombinant insulin analogs in China, the company has long been in a leading position in the domestic third-generation insulin industry. With the company's active layout in overseas markets in recent years, its competitiveness in the international market has continued to improve, and it will soon usher in new performance growth points. At the same time, competition in the domestic diabetes medication pattern is intensifying, and bioanalogues face the risk of being collected and reduced in price. We adjusted our profit forecast for the company. It is estimated that the company's EPS for 2021-2023 will be 2.53, 2.86, and 3.30 yuan respectively, and that the corresponding PE for the stock price on April 16, 2021 will be 49X, 44X, and 38X respectively, maintaining the “prudent increase in holdings” rating.

Risk warning: risk of price reduction in insulin collection; insulin sales falling short of expectations; development of new products is progressing slower than expected; overseas market development is lower than expected; risks related to centralized procurement.