Yili Chuanning Biotechnology (SZ:301301) Minsheng Securities·2025-10-28 13:20Investment Rating - The report maintains a "Recommended" rating for the company, indicating an expected stock price increase of over 15% relative to the benchmark index [5][6]. Core Views - The company's performance in the first three quarters of 2025 has been under pressure due to a seasonal decline in antibiotic demand, with a significant drop in revenue and net profit compared to the previous year [1][5]. - The price of penicillin intermediates has decreased significantly, impacting profitability, with the gross margin falling to 32.8% in the first three quarters of 2025 [2][5]. - Despite the current challenges, the company is expected to stabilize and recover as it moves past the low demand phase, particularly with the anticipated seasonal demand increase in Q4 [3][5]. - The synthetic biology segment is progressing well, with the company’s production capacity ramping up and new products entering trial phases, which could provide a second growth curve for the company [4][5]. Summary by Sections Financial Performance - For the first three quarters of 2025, the company reported revenues of 3.44 billion yuan, a year-on-year decrease of 22.9%, and a net profit of 610 million yuan, down 43.2% [1]. - In Q3 2025 alone, revenues were 1.09 billion yuan, reflecting a 13.8% year-on-year decline but a 3.4% increase from the previous quarter [1]. Market Dynamics - The price of the key product, 6-APA, has dropped from a peak of 320 yuan/kg in December 2024 to 190 yuan/kg in September 2025, a decline of 40.6% [2]. - The overall market demand for antibiotics has weakened, influenced by lower flu-related bacterial infections, which has reduced the market usage of antibiotics [3]. Future Outlook - The company is expected to see a recovery in antibiotic prices as they are currently at historical lows, particularly with the upcoming winter demand season [3]. - The synthetic biology business is projected to grow as production capacity increases, with initial trials for methanol protein products showing positive progress [4][5]. Profit Forecast - The profit forecasts for 2025 to 2027 have been adjusted downward, with expected net profits of 820 million yuan, 930 million yuan, and 1.03 billion yuan respectively, reflecting a significant decline in 2025 but a recovery in subsequent years [5][6].