HUADONG MEDICINE(000963) 国金证券·2024-08-16 06:03Investment Rating - The report maintains a "Buy" rating for East China Medicine (000963 SZ) [2] Core Views - The company achieved revenue of 20 965 billion yuan (+3%) and net profit attributable to the parent company of 1 696 billion yuan (+18%) in the first half of 2024 [2] - The second quarter of 2024 saw revenue of 10 554 billion yuan (+3%) and net profit attributable to the parent company of 834 million yuan (+23%) [2] - The company's four major business segments (pharmaceutical industry pharmaceutical commerce medical aesthetics and industrial microbiology) showed steady growth with improved profitability [2] - The medical aesthetics segment achieved revenue of 1 348 billion yuan (+10 14%) with Sinclair contributing 570 million yuan (-14 81%) and Xinkeli Aesthetics contributing 618 million yuan (+19 78%) [2] - The company has 86 innovative drug and biosimilar projects in its R&D pipeline as of August 2024 with several key products in advanced stages of development [2] Financial Performance - The company's revenue is expected to grow from 44 629 billion yuan in 2024E to 53 529 billion yuan in 2026E with a CAGR of 9 63% [4] - Net profit attributable to the parent company is projected to increase from 3 364 billion yuan in 2024E to 4 572 billion yuan in 2026E with a CAGR of 16 55% [4] - EPS is forecasted to grow from 1 92 yuan in 2024E to 2 61 yuan in 2026E with corresponding P/E ratios of 16x 13x and 12x [3] - ROE is expected to improve from 14 38% in 2024E to 15 31% in 2026E [4] Business Segments - The core subsidiary Sino-American East China achieved revenue of 6 698 billion yuan (+10 63%) and net profit of 1 385 billion yuan (+11 48%) in the first half of 2024 [2] - The medical aesthetics segment contributed 13 48% of total revenue with Xinkeli Aesthetics showing strong growth of 19 78% [2] R&D Progress - The company has 86 innovative drug and biosimilar projects in its pipeline as of August 2024 [2] - Key products include Somituoximab injection (for platinum-resistant ovarian cancer) and Maihuatinib tablets (for EGFR-sensitive mutations) which have received marketing application acceptance [2] - The oral small molecule GLP-1 receptor agonist HDM1002 completed Phase 2 clinical trials for weight management in overweight or obese populations [2] - The global innovative product Rilonacept for injection (ARCALYST®) and Ustekinumab biosimilar are under review for CAPS RP and plaque psoriasis indications respectively [2]