Sun-Novo(SH:688621) Capital Securities·2024-03-14 16:00Investment Rating - The report assigns a "Buy" rating to the company, indicating a potential upside of over 15% relative to the CSI 300 index [35][63]. Core Views - The company has shown continuous growth in new order amounts, cumulative order amounts, and customer numbers, reflecting an improvement in market reputation and customer satisfaction [3][4]. - The company is actively pursuing self-initiated projects, with over 40 new research projects initiated in the first half of 2023, totaling more than 290 projects [3]. - The company is expanding its service range from generic drugs to innovative drugs, which is expected to enhance revenue from existing customers [3][4]. - The report highlights the robust growth potential of the company's CRO business, particularly in the context of the increasing demand for generic drugs due to an aging population and the expiration of patents for major innovative drugs [10][21]. Summary by Sections Company Overview - The company operates as a comprehensive CRO for drug development, focusing on both innovative and generic drug development, and has established a full-process integrated drug development service platform [22][25]. - The company has a strong pipeline of innovative drugs and improved generic drugs, with several projects already achieving external authorization [57]. Financial Performance - The company has experienced rapid revenue and profit growth, with a CAGR of 79.76% for revenue and 175.03% for net profit from 2017 to 2022 [27]. - For 2023, the company expects revenues of 9.54 billion yuan, with a year-on-year growth rate of 41.0%, and net profits of 1.94 billion yuan, reflecting a growth rate of 24.7% [11][35]. Market Trends - The report notes that the activity level in the generic drug sector is expected to remain high, driven by increasing demand and a growing number of new entrants in the market [10][21]. - The company is well-positioned to benefit from the ongoing trends in the pharmaceutical industry, including the increasing focus on high-quality generic drug development and the need for faster delivery and quality in drug research [10][21]. Research and Development - The company has made significant investments in R&D, focusing on areas such as peptide drugs, modified new drugs, and complex generics, which are expected to yield high-margin revenue streams in the future [3][22][25]. - The company has established collaborations with various enterprises for joint development projects, which are anticipated to contribute to revenue through profit-sharing agreements [57].