Incident: The company announced its semi-annual report for 2023, achieving operating income of 748 million yuan (+149.24% YoY), net profit of 208 million yuan (+678.69%), and net profit of 184 million yuan (+3976% YoY) after deducting non-return net profit.

Comment: Q2 The company's revenue and profit exceeded expectations. Sales revenue increased for 6 consecutive quarters. After first-line indications were approved and successfully included in the medical insurance catalogue, volmetinib sales changed qualitatively from month to month. In terms of expanding indications, fumetinib had a comprehensive layout. The opening of NSCLC international multi-center phase III clinical trials and early data reading for the EGFR20 exon mutation is expected to continue to enhance the global space. As the volume of vumetinib was released, the scale effect gradually became apparent, and the management and R&D cost rate declined.

Profit prediction and valuation: With the approval of the first and second line treatment of the blockbuster product vumetinib, the smooth progress of clinical trials for indications such as adjuvant treatment and 20 exon mutations, and the overseas progress of the product, the company is expected to rapidly expand and open up future space on the sales side. Considering that the company's performance in the first half of the year exceeded expectations, we adjusted our profit forecast. The estimated EPS for 2023-2025 will be 0.71 yuan, 1.18 yuan, and 1.71 yuan. The price-earnings ratios corresponding to the closing price of August 28, 2023 are 35.1X, 21.0X and 614.614.6X, respectively , maintain the “increase in holdings” rating.

Note: Alice is a market-making company for Societe Generale Securities

Risk warning: New drug development falls short of expectations, product sales fall short of expectations, etc.