Solid growth in product sales, Sieglertas sodium performs Medicare prices. The company's revenue in the first half of 2023 was 0.242 billion billion yuan, up 12% year-on-year, of which product sales revenue totaled 0.236 billion billion yuan, up 18% year-on-year.

cedarbenamine sales revenue of 0.228 billion yuan, up 17% year-on-year, its blood tumor maintained steady growth, breast cancer indications due to non-medical insurance sales accounted for a small proportion. We believe that the release of sidaben amine needs to pay attention to the approval of the new indication for the first-line treatment of diffuse large B- cell lymphoma, and the listing application for this indication has been accepted.

sigreta sodium began to implement the medical insurance price in March. in the first half of the year, the sales revenue was 7.51 million yuan, with the sales volume increasing 456 year on year, but the revenue affected by the price reduction only increased 28%. Affected by objective conditions such as the uncertainty of the convening time of the local pharmacy committees, Sigreta Sodium was officially admitted to more than 500 hospitals by June 2023. We believe that the release of Sigreta sodium needs to pay attention to (1) hospital access and prescription volume in the second half of the year, (2) production line 2 is put into operation, and the company expects to complete the verification of the expansion line and start GMP certification in the third quarter, and (3) the progress of the indication of Sigreta sodium combined with metformin, and the application for the listing of the indication has been accepted.

microchip new domain investment income to make the company turn a loss. The company's net profit to its parent in the first half of the year was 0.156 billion yuan, compared with a loss of 19.29 million yuan in the same period last year. After deducting non-net profit, the loss was 0.148 billion yuan, compared with 22.58 million yuan in the same period last year. The company's loss in the first half of the year was mainly due to the reorganization of the board of directors after the new round of capital increase and share expansion and the implementation of equity incentive. Microchip Biology could not control it. Microchip New Domain was no longer included in the scope of the company's consolidated statements. The remaining shares after the company lost control of Microchip New Domain were calculated at fair value and the investment income was confirmed. The amount involved in the first half of the year was 0.289 billion yuan.

R & D investment increased. In the first half of the year, the company invested 0.248 billion yuan in research and development, up 89% year-on-year, accounting for 102 percent of the revenue. Among them, the research and development expenses of the new micro-core domain totaled 65.36 million yuan and were incorporated into the company's statement (the down payment and milestone of the introduction of double anti-project totaled 50 million yuan). In the first half of the year, the cost-based R & D investment was 0.162 billion yuan, up 113 percent year-on-year, and the capitalized R & D investment was 85.42 million yuan, up 56% year-on-year.

pay attention to the progress of the company's key indications:

cedarben amine (1) first-line treatment of diffuse large B cell lymphoma, the listing application has been accepted, and CDE has been included in the priority review procedure;(2) The first-line joint Nivo PD-1 treatment of melanoma is implemented by partner Huya Biology. Phase III clinical trials are being carried out in 17 countries around the world, and 480 people are planned, 310 patients have been enrolled in the group;(3) The first-line treatment of PD-L1-positive non-small cell lung cancer with chidaramide combined with temellizumab (PD-1 antibody) has been reported to be nearly 60% as of the interim report;? The application for listing of (1) combined with metformin for the treatment of type 2 diabetes has been accepted, and we believe that the approval of the first-line indication will be conducive to expanding the commercial release of the use of cetaratar;(2) Phase II clinical treatment of nonalcoholic steatohepatitis (NASH) by sioglitazone sodium is expected to be completed in 2023Q3;

sioronil (1) Phase III clinical treatment of small cell lung cancer is expected to be completed in 2023Q3;(2) Theoronil combined with paclitaxel in the treatment of platinum refractory or platinum resistant recurrent ovarian cancer phase III clinical, completing the 1/3 group. Theoroni has been included in the list of breakthrough treatment varieties by the Center for Drug Evaluation.

Earnings Forecast and Valuation. The company's global number of clinical trials are underway, we believe that the company's 2023-25 revenue side will continue to grow, the profit side of the impact of research and development investment there is some uncertainty. We expect 2023-25 company revenue of 0.615 billion yuan, 0.922 billion yuan, 1.203 billion yuan, respectively, year-on-year growth of 16%, 50%, 30%, 2023-25 net profit of 0.282 billion yuan, 0.033 billion yuan, 0.095 billion yuan.

We assume a perpetual growth rate of 1.25 to 1.75, WACC value of 8.04 to 8.54, then the company's DCF valuation reasonable market value range of 104.2 to 12.44 billion yuan, corresponding to the reasonable value range of 25.34 to 30.25 yuan/share, to maintain the "better than the market" rating.

risk warning: research and development progress is not expected, commercialization progress is not expected.