Q2 Performance improved significantly from month to month, and the leading position in the peptide synthesis reagent industry is stable

With 2024H1, the company achieved revenue of 0.225 billion yuan, up 7.12% year on year; net profit to mother of 65.81 million yuan, up 12.04% year on year; net profit after deducting non-return to mother of 59.28 million yuan, up 6.79% year on year. Looking at Q2 alone, the company achieved revenue of 0.134 billion yuan, up 57.64% year on year and 46.69% month on month; net profit to mother was 35.98 million yuan, up 60.27% year on year, up 20.62% month on month; net profit after deducting non-return to mother was 33.51 million yuan, up 55.49% year on year, up 30.05% month on month. The company's performance improved markedly month-on-month. The domestic and foreign peptide drug market is rapidly expanding, and demand for upstream peptide synthesis reagents is steadily increasing. We are optimistic about the long-term development of the company and maintain the original profit forecast. The net profit for 2024-2026 is 0.117/0.15/0.189 billion yuan, EPS is 1.08/1.39/1.75 yuan, and the current stock price corresponds to PE 33.7/26.3/20.8 times. In view of the rapid development of the peptide drug field and the company's leading position in the industry, it maintains a “buy” rating.

Sales of peptide synthesis reagents in the core business grew steadily. Customers covered 2024H1, a leading enterprise at home and abroad, with sales of peptide synthesis reagents of about 0.183 billion yuan, an increase of 11.62% over the previous year; sales of general-purpose molecular blocks were 31.92 million yuan, a year-on-year decrease of 19.85%. The company focuses on the field of peptide synthesis reagents, and can mass-produce and stably supply more than 160 products, accounting for 75% of the total; among them, ionic condensation reagents account for about 25% of the global supply, and the segment dominates the market. By the end of June 2024, the company's customers covered more than 1,900 pharmaceutical R&D and manufacturing companies, CRO and CDMO companies at home and abroad, including leading multinational pharmaceutical companies, such as Bachem AG, Lonza AG, PolyPeptide, etc., as well as well-known domestic service outsourcing companies specializing in pharmaceutical R&D and production, such as Pharmacom Kangde, Gloria Ying, and Kanglong Chemical.

Self-owned production capacity is gradually being implemented to enable the company's medium- to long-term development

In order to break through the bottleneck of production capacity, the company accelerated the construction of its own production capacity. The company's own production base, Anhui Haofan, a construction project with an annual output of 1002 tons of polypeptide reagents and pharmaceutical intermediates obtained a trial production approval notice in February 2024. In May 2024, the company signed an “Investment Framework Agreement” with the Jiangsu Huai'an Industrial Park Management Committee to invest in the construction of a peptide synthesis reagent project in Jiangsu Huai'an Industrial Park. With the completion and commissioning of Anhui Haofan and Huai'an Haofan's own production capacity, the company will gradually achieve independent production, which is expected to further enhance product competitiveness.

Risk warning: changes in domestic policies, loss of core talent, decline in industry demand, etc.