Regular business is developing steadily, and the implementation of new production capacity opens up medium- to long-term growth space. In the first three quarters of 2023, the company achieved revenue of 3,037 billion yuan, a year-on-year decrease of 41.79%; net profit of 452 million yuan, a year-on-year decrease of 71.36%; net profit after deducting 425 million yuan, a year-on-year decrease of 73.08%. Looking at Q3 alone, the company achieved revenue of 698 million yuan, a year-on-year decline of 46.44%; net profit of 41 million yuan, a year-on-year decrease of 88.65%; net profit after deducting non-return net profit of 34 million yuan, a year-on-year decrease of 90.68%. As of 2023Q3, the company's large orders have all been delivered, and the small molecule CDMO and gene cell therapy CDMO businesses are developing rapidly; the company continues to promote global production capacity layout, and the 2023Q3 Biomacromolecule R&D Center in Waigaoqiao, Shanghai and the Crystallization and Formulation Laboratory in New Jersey have been successfully put into operation, further enhancing the company's integrated service capabilities for APIs and formulations. Considering the phased slowdown in downstream demand in the industry, we lowered the company's profit forecast for 2023-2025. The estimated net profit was 5.28/4.71/595 billion yuan (originally estimated at 6.84/5.48/694 million yuan), EPS was 0.97/0.86/1.09 yuan, and the current stock price corresponding to PE is 30.9/34.6/27.4 times, maintaining the “buy” rating.

Small molecule API CDMO: The number of customers grew steadily, and the number and quality of projects continued to improve. In the first three quarters of 2023, the company's small molecule API CDMO business achieved revenue of 2,942 billion yuan, a year-on-year decrease of 43%; the company provided small molecule API CDMO services to about 300 customers around the world and introduced 77 new domestic and foreign customers; the number of orders signed (excluding J-STAR) was 592 (+32%), and the number of projects delivered was 448 (+35%). Meanwhile, in the first three quarters of 2023, the company's service API products were 144 (+17); API products achieved revenue of 339 million yuan, an increase of 31% over the previous year. With the gradual flow of front-end cultivation projects to the back-end and the continuous transformation and upgrading to API, the small molecule API CDMO business is expected to maintain steady growth.

New business capabilities continue to advance, and the new business capabilities of companies that open up long-term development continue to advance. In the first three quarters of 2023, the pharmaceutical and CGT businesses achieved revenue of 0.61 to 032 billion yuan respectively, an increase of 237%/85% over the previous year. Among them, the pharmaceutical business provided pharmaceutical CDMO services to 80 customers, with 119 service projects; the amount of newly signed pharmaceutical orders was about 144 million yuan, an increase of 211% over the previous year; and the CGT business introduced 44 new customers, 64 new projects, and signed new orders of 58 million yuan. With the construction and implementation of synthetic macromolecule capabilities, the company has undertaken synthetic macromolecule services for 9 customers, achieving revenue of 1.96 million yuan.

Risk warning: order delivery falls short of expectations; market competition intensifies; environmental protection and production safety risks.