Jiuzhou Pharmaceutical(603456) EBSCN·2024-11-02 02:39Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company's performance is under short-term pressure, with a significant decline in revenue and net profit in Q3 2024 compared to the previous year [1] - Despite the short-term challenges, the CDMO (Contract Development and Manufacturing Organization) business is experiencing continuous growth in overseas new projects, particularly in the ADC (Antibody-Drug Conjugates) and peptide sectors [2] - The API (Active Pharmaceutical Ingredients) business faces intensified market competition, prompting the company to accelerate the integration of raw material and formulation processes [3] Summary by Sections Financial Performance - For the first three quarters of 2024, the company achieved revenue of 39.65 billion yuan, down 13.36% year-over-year, and a net profit of 6.31 billion yuan, down 34.74% year-over-year [1] - In Q3 2024, revenue was 12.01 billion yuan, a decrease of 9.15% year-over-year, with a net profit of 1.56 billion yuan, down 54.82% year-over-year [1] - The gross margin for Q3 2024 was 33.68%, a decline of 7.86 percentage points year-over-year, and the net profit margin was 12.98%, down 13.12 percentage points year-over-year [1] CDMO Business - In H1 2024, the CDMO business generated revenue of 19.71 billion yuan, a decrease of 20.61% year-over-year, but the gross margin improved slightly to 41.06% [2] - The company saw a 15% year-over-year increase in the number of new projects, with over half of these projects coming from overseas clients [2] - The company has established a TIDES division to focus on peptide and ADC businesses, with plans to build six GMP production lines for peptides over the next five years [2] API Business - The API business reported revenue of 7.32 billion yuan in H1 2024, an increase of 5.54% year-over-year, but faced significant declines in revenue and gross margin in Q3 due to increased competition [3] - The company is optimizing its product structure and upgrading existing products to enhance profitability in the API segment [3] - As of June 2024, the company has reserved 22 generic drug formulation projects, with four approved and six submitted for market approval [3] Earnings Forecast and Valuation - The forecast for the company's net profit for 2024 and 2025 has been revised down to 8.84 billion yuan and 9.90 billion yuan, respectively, reflecting a reduction of 44% and 50% from previous estimates [3] - The estimated EPS for 2024, 2025, and 2026 is projected to be 0.98 yuan, 1.10 yuan, and 1.26 yuan, respectively, with corresponding PE ratios of 17, 15, and 13 times [3]