Performance analysis: 1H23, the company realized income of 1.37 billion yuan (+ 9.8%, same increase, the same below), net profit of 75 million yuan (+ 7.5%), and non-return net profit of 68 million yuan (+ 33.4%). The investment in R & D is 372 million yuan (+ 7.3%). 2Q23, the company realized income of 750 million yuan (+ 8.9%), net profit of 46 million yuan (+ 6.2%), net profit of 42 million yuan (+ 27.0%), sales expense rate of 34.8% (- 1.1 pct), R & D expense rate of 15.8% (+ 2.1 pct), management expense rate of 12.2% (+ 0.8 pct), gross profit margin of 70% (+ 1.7 pct) and net profit rate of 5.8% (- 0.5 pct).

Income split: 1H23, anesthetic products 340 million yuan (+ 165.7%), sales revenue of cyclopofol about 340 million yuan in the first half of 2023, a record high of 900000 in June, more than two years on the market has entered about 2400 hospitals in China; parenteral nutrition 280 million yuan (- 4.6%); other indications 190 million yuan (+ 18.0%); API 240 million yuan (- 2.0%) Service revenue is 130 million yuan (- 27.8%). Polyene phosphatidylcholine injection and Dorasetron mesylate injection (Libifu) two products have also been successfully changed from agent marketing mode to self-operated team for academic promotion.

Research and development progress: by the mid-2023 report, Phase 3 of cyclopropofol in the United States has progressed smoothly and is expected to be submitted to NDA in 2024. The third phase III trial is planned to be carried out in the United States and Europe in 2023.

HSK16149 (Diabetic Peripheral Neuralgia), HSK7653 (Type 2 Diabetes) and riluzole Oral membrane have been declared NDA,HSK21542 (postoperative analgesia drugs) have recently submitted NDA applications, HSK31858 (respiration), HSK31679 (metabolism) domestic II phase clinical progress smoothly. The domestic phase I clinic of tumor drugs (HSK29116, HSK40118, HSK38008) has progressed smoothly. At present, a total of 9 Class 1 innovative drugs have entered the clinic, with more than 800 people in the R & D center, including 100 in the new drug chemistry team, nearly 100 in the biological team, 260 in the pharmaceutical team and 300 in the clinical team.

Profit forecast and investment rating: due to the impact on sales of Dora and the transfer of Polyene agents, as well as the lower-than-expected increase in net interest rate, we reduced the company's 2023-2025 net return to the company's net profit from 3.1 to 2025, respectively, from 3.1 to 4.2 billion, downgraded to 2.8 to 3.2 million, and the current market capitalization corresponding to PE is respectively times that of 84-74-54. Because of the company's excellent R & D capability, there are expected to be 4 commercial innovative drugs in 2024, and a number of projects have the potential for external authorization to maintain a "buy" rating.

Risk hint: innovative drug delivery is less than expected, drug price reduction risk, with volume procurement risk