Youcare Pharmaceutical (688658) KAIYUAN SECURITIES·2024-10-31 06:40Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company reported a strong performance in Q3 2024, with revenue of 10.42 billion yuan (up 37.47% year-on-year) and a net profit of 2.02 billion yuan (up 45.90% year-on-year), indicating a turnaround from previous losses [1][2] - The growth in revenue is attributed to steady sales of core products, particularly the ginkgo leaf extract injection, and a reduction in selling expenses [1] - The company maintains a positive outlook on its innovative pipeline, projecting net profits of 3.2 billion yuan, 4.08 billion yuan, and 5.48 billion yuan for 2024, 2025, and 2026 respectively, with corresponding EPS of 0.71 yuan, 0.91 yuan, and 1.22 yuan [1][2] Financial Performance Summary - For Q1-Q3 2024, the company achieved a gross margin of 60.38% (down 3.95 percentage points) and a net margin of 6.96% (up 1.73 percentage points) [1] - The sales expense ratio decreased to 36.01% (down 8.01 percentage points), while the R&D expense ratio increased to 8.73% (up 0.89 percentage points) [1] - The company’s operating cash flow for Q1-Q3 2024 was 4.30 billion yuan [1] Innovative Pipeline Progress - The company has made significant progress in its innovative drug pipeline, with several NDA applications submitted and clinical trials ongoing for various products, including traditional Chinese medicine and peptide drugs [3] - The NDA application for the injection of hydroxyl safflower yellow A for treating acute ischemic stroke was accepted by the CDE, with expectations for approval in H1 2025 [3] - The company is also advancing its nucleic acid drugs, with IND approvals in the US and China for its first small interfering nucleic acid drug [3]