Investment Rating - The report initiates coverage on Federal Pharmaceutical (03933 HK) with a "Buy" rating [2][3] Core Investment Thesis - Federal Pharmaceutical is a leading player in the penicillin-based antibiotics sector, benefiting from the current high industry demand [1] - The company has a well-established presence in the insulin and GLP-1 markets, with a robust pipeline including the innovative triple-target UBT251, which has global rights and is in advanced clinical stages [1] - The animal health business is poised to become a second growth driver, with three new production bases expected to alleviate capacity constraints [1] - The company has implemented an equity incentive plan in 2023, granting 12 0969 million shares, which is expected to enhance group cohesion [1] Antibiotics Business - Federal Pharmaceutical is the global leader in penicillin intermediates, with a nearly 50% market share in 6-APA production [1] - The company's 6-APA production is supported by high environmental barriers, ensuring stable competition [1] - In H1 2024, the company's intermediate revenue increased by 25 4% to RMB 1 314 billion, while API revenue rose by 1 2% to RMB 3 464 billion [1] - The company is expanding into higher-value sterile APIs, with a RMB 1 2 billion project in Gaolan Port expected to commence production in 2025 [1] Insulin and GLP-1 Pipeline - Federal Pharmaceutical has a comprehensive pipeline in the diabetes and weight loss sector, with 44 R&D projects, including GLP-1 products like liraglutide and semaglutide [2] - The company's UBT251, a triple-target GLP-1/GIP/GCG agonist, is the first in China and second globally to enter clinical trials using chemical synthesis [2] - The company's insulin products, including U40, U100, and premixed insulins, have secured favorable positions in national procurement, with a 52 5% increase in procurement volume [2] Animal Health Business - The animal health business has shown rapid growth, with a CAGR of 75% from 2020 to 2023 [2] - The company's core products in the animal health sector are primarily antibiotic formulations, leveraging its expertise in antibiotics [2] - Three new production bases are expected to be operational by the end of 2024, with a combined output value exceeding RMB 5 billion [2] - The pet drug segment is a key focus, with over 40 pet drugs in the pipeline, including five Class 1 new veterinary drugs [2] Financial Projections - The company is expected to achieve net profits of RMB 3 095 billion, RMB 3 513 billion, and RMB 3 892 billion for 2024, 2025, and 2026, respectively [2] - The corresponding P/E ratios are projected at 4 8x, 4 2x, and 3 8x for the same periods [2] Industry Overview - The global antibiotics market is projected to reach USD 57 billion by 2024, with China being the largest consumer [29] - The industry faces strict regulatory controls, with limited new capacity additions due to environmental barriers [30] - Federal Pharmaceutical holds a dominant position in the 6-APA market, with a 45% market share, followed by Chia Tai Tianqing and CSPC Pharmaceutical [34]
联邦制药：青霉素类抗生素龙头，胰岛素GLP-1、动保赋能第二增长曲线