Event: On February 28, 2025, the company announced its 2024 annual results. According to the announcement, the company will achieve operating income of 1.62 billion yuan in 2024, a year-on-year increase of 57.2%; The net profit attributable to the parent company was 400 million yuan, a year-on-year increase of 145.9%.

The company's peptide production capacity continues to break through, and the new production capacity will climb in the future, which is expected to continue the company's high performance growth trend.

1) Peptide API: The company's new 601 peptide workshop will be completed and put into operation near January 2025, achieving a peptide production capacity of 5 tons/year, and the new 602 peptide workshop is expected to complete the construction, installation and commissioning in H1 2025, and will release another 5 tons/year of peptide production capacity; 2) Preparation business: In July 2024, the hard capsule production line of the oral solid preparation workshop of the new preparation plant passed the drug GMP compliance inspection, achieving an annual production capacity of 4.5 billion tablets of oseltamivir phosphate capsules and other preparation varieties. In addition, the second phase of the company's new preparation plant construction project was launched, which is expected to increase the company's production capacity of injections and lyophilized powder injections; 3) CDMO: forward-looking layout and development of oligonucleotide production capacity, the project progressed smoothly, and the 705 workshop was capped. In December 2024, the groundbreaking ceremony of the company's oligonucleotide tonnage commercial production workshop was officially opened, and the construction is planned to be completed in 2025 H2, forming an annual output of 1,000 kg of oligonucleotides, 100 kg of PMO and other high-quality production capacity.

Customer expansion has blossomed in many places, and a number of strategic cooperation has been reached, highlighting the company's technical heritage + commercialization capabilities.

With a BD team with an international perspective, the company has carried out business penetration and expansion in an orderly manner around the world. 1) European market: cooperated with a number of leading generic drug companies in oral semaglutide and tirpatide APIs; 2) North American market: Reached the cooperation of liraglutide preparations in the US market API, and newly expanded the first animal innovative drug peptide CDMO project; 3) South American market: signed a strategic cooperation agreement on semaglutide preparations, and reached a cooperation agreement on the first generic marketing API of liraglutide preparations; 4) Indian market: Reached cooperation with leading generic drug companies on the global marketing of liraglutide preparations, signed and promoted a number of oligonucleotide CDMO services; 5) Domestic market: Reached a strategic cooperation on GLP-1 innovative drug APIs and preparations.

The patents of GLP-1 blockbuster varieties are expiring in echelons, and the company is expected to further expand with the help of existing customer resources. According to Eli Lilly and Novo Nordisk's 24 Q4 report, the sales of liraglutide, semaglutide and tirpatide are still maintaining a year-on-year growth trend, of which the sales growth rate of Wegovy and Mounjaro reached 107.0% and 60.0% respectively. The patent status of liraglutide, semaglutide and tirpatide in the main regulatory market is as follows: expired/expired in 2026-2032/expired in 2027-2040. There is an obvious time echelon in the imitation stage of peptide blockbuster drugs, and the company is expected to further expand its varieties horizontally by virtue of existing customer resources.

Investment Advice: We expect that in the context of capacity expansion and continuous deepening of customer resources, the company's self-selected products and CDMO business are expected to lead the rapid growth of future performance. It is expected that the company will achieve operating income of 23.9/3.09 billion yuan from 2025 to 2026, with a year-on-year growth rate of 47.2%/29.1% respectively; The net profit attributable to the parent company was 5.7/780 million yuan, with a year-on-year growth rate of 42.6%/36.8% respectively, and the corresponding PE was 21/15 times, maintaining the "recommended" rating.

Risk warning: geopolitical risk, exchange rate fluctuation risk, capacity construction is less than expected, etc.