internationalization and fine hemp pipeline cash, business development to welcome the new cycle. Yuandong Bio as a research and development innovation-driven, API preparation integration of pharmaceutical platform, the company's internal accumulation of deep. Over the past five years, the company's R & D expense ratio has remained at a high level of 15-20%. After years of high-intensity R & D investment, the company can not only maintain more products on the market every year, but also achieve breakthroughs in the field of internationalization and refined hemp. While accelerating the growth of performance, the company's operating quality is also expected to continue to improve.

domestic preparations: stock risk out, imitation of new products and refined hemp products have a better release potential.

1) High-end generic drugs: With the collection of sodium ibandronate and caffeine citrate, the risk of collection of the company's stock varieties has been basically cleared. On the basis of the release of stock risk, the company's incremental varieties also have a good release potential, the number of new batch of preparation varieties of the company in 2020-2023 are 6, 5, 6 and 10, and the number of new approved products of the company in 2024 is expected to reach 14, will show a pure increase. On this basis, we expect a baseline growth of at least 20-30% per year in preparation revenue.

2) fine hemp drugs: the company gradually cut into the policy barriers higher, the competitive landscape is more excellent in the field of narcotic analgesia, and now also become an important turning point in the company's fine hemp layout. According to the review and approval and the pace of clinical promotion, we expect that the company's nalbuphine and butorphanol are expected to be approved for listing in 2024. Two new red prescription class 2 new drugs, paracetamol oxycodone sustained-release tablets and morphine sulfate naltrexone hydrochloride sustained-release capsules, are also expected to be reported for production within the year. Four narcotic analgesic varieties are expected to become an important increase in future performance.

3) innovative drugs: the company's innovative drugs actively test water, the establishment of a number of differentiated innovative varieties. According to the 2023 semi-annual report, the company has more than 10 Class 1 innovative drugs under research. The innovation pipeline covers many fields such as fine anesthesia, diabetes, cardiovascular, and tumors. The two products that have entered the clinic are Eugliptin and EP-9001A monoclonal antibody injection. Among them, the progress of the drug is relatively fast, and the Phase III single-drug clinical trial has been completed, and the product is expected to be approved for market in 2026.

preparation internationalization: differentiated layout potential of large varieties, 2024 ushered in the harvest. The internationalization of preparations is an extremely important part of the company's medium-term strategy. In November 2023, nalmefene hydrochloride injection was approved by FDA for listing, becoming the company's first preparation variety to go to sea, marking the company's internationalization from 0 to 1. Substantial breakthrough. And the company is accelerating the development of naloxone nasal spray, nalmefen nasal spray and other characteristics and technical barriers dosage forms, is expected to bring the company's profits, valuation double-click.

to promote sales reform, to protect future performance growth. The company actively promote sales reform, on the one hand, the company adjusted the marketing structure, the new pain division and retail division, according to the product characteristics to fully develop the market potential of various products. On the other hand, the company has set up a self-employed team dedicated to pain products, and piloted self-employed in key areas to quickly promote the commercialization of new products.

profit forecast: due to the disturbance of performance caused by domestic centralized procurement and deferred government subsidies, we lowered our profit forecast. we expect the net profit attributable to the company from 2023 to 2025 to be 2.26 yuan, 2.83 yuan and 0.356 billion yuan respectively (the original forecasts from 2023 to 2025 are 2.48 yuan, 2.96 yuan and 0.367 billion yuan), up -8.2, 25.2 and 25.6 year on year, and EPS to be 1.88 yuan, 2.36 yuan and 2.96 yuan respectively, the current share price corresponds to 27, 21 and 17 times PE for 2023-2025, respectively. The company's domestic preparations have a clear and rapid growth prospects, as well as a better competitive pattern of refined hemp products and the continuous increase in the proportion of preparation exports, according to DCF valuation, the company's reasonable valuation of 9 billion yuan, corresponding to the share price of 75.1 yuan. Maintain a "strong push" rating.

risk factors: 1, the company's products were approved later than expected; 2, the company's product collection lost bid risk; 3, the U.S. market competition intensified.