Matters:

The company achieved revenue of 0.072 billion yuan (+43.23%) in 24Q3, realized net profit of 3.0967 million yuan (-41.54%), and net profit after deduction was 0.3425 million yuan (-83.52%).

Ping An's point of view:

High growth in the culture medium continues, and tax supplements affect current profits

24Q3's culture base achieved revenue of 0.056 billion yuan (+56.61%), continuing rapid growth in the first half of the year; the CDMO business achieved revenue of 0.016 billion yuan (+9.27%), which has improved quarterly since Q1.

Comprehensive gross profit margin 52.46% (year-on-year +0.39pct, month-on-month +0.04pct).

The sharp drop in profit for the quarter was mainly due to the company's disqualification as a high-tech enterprise and centralized tax compensation in Q3. Looking at the total profit before tax, 24Q3 was 9.1857 million yuan, +58.45% compared to the same period last year.

The total number of projects continues to increase, and more projects are being commercialized

As of 24Q3, a total of 230 drug development pipelines with confirmed pilot testing processes used the company's medium. Among them, there were 14 changes in Q3 in a single quarter, including preclinical +13, clinical phase 1 - 4, clinical phase 2 - 3, clinical phase 3 plus 5, and commercialization stage +3.

On the one hand, the number of late-stage high-value projects at home and abroad increased, laying the foundation for the company's supporting culture medium release. On the other hand, the company strengthens European and American teams, actively explores early innovative drug business opportunities, and accumulates a rich project funnel.

Maintain a “Recommended” rating. Considering the company's mid-stage project listing pace and volume expectations, the 2024-2026 profit forecast was adjusted to net profit of 0.057, 0.092, and 0.133 billion yuan (originally predicted net profit of 0.067, 0.109, 0.158 billion yuan). The number of new projects added by the company and the number of projects entering the later stages has maintained a relatively rapid growth rate. The certainty of continued growth in performance is high, and the “recommended” rating is maintained.

Risk warning: 1) Risk of insufficient downstream demand; 2) Customer drug marketing changes falling short of expectations; 3) New product development progress falling short of expectations; 4) Overseas expansion progress falling short of expectations.