SNSW(SH:688117) KAIYUAN SECURITIES·2024-03-23 16:00Investment Rating - The report gives an investment rating of "Buy" for the company [2]. Core Views - The company focuses on the entire peptide industry chain, with strong development in three core business segments: peptide raw materials, peptide formulations, and peptide CDMO services. The company has seen steady growth in these areas, with several peptide raw material products receiving domestic and international approvals. The peptide formulation products, including injection somatostatin and acetic acid atogepant injection, have been awarded in the national centralized procurement. The CDMO pipeline is advancing, opening up growth opportunities. The company is expected to see significant profit growth from 2023 to 2025, with projected net profits of 0.70 billion, 1.41 billion, and 1.76 billion respectively, and corresponding EPS of 0.63, 1.26, and 1.57. The current stock price corresponds to PE ratios of 49.5, 24.7, and 19.8, which are below the average valuations of comparable companies [6][24]. Summary by Sections 1. Company Overview - The company is a high-tech enterprise focusing on peptide synthesis and modification technology, with advanced capabilities in peptide drug process research and large-scale production. Its main business includes the independent research and sales of peptide raw materials and formulations, as well as peptide innovative drug CDMO services. The company has been actively expanding its production capacity, with new capacity expected to be operational in 2024 [24][26]. 2. Market Dynamics - The GLP-1 drug market is rapidly expanding, with significant sales growth driven by products like semaglutide and tirzepatide, targeting chronic diseases such as type 2 diabetes and obesity. This has led to increased demand for upstream peptide production capacity, benefiting leading domestic peptide companies [7]. 3. Business Development - The company is enhancing its peptide production capacity, with technical upgrades and fundraising projects expected to increase capacity to over 1200 kg. The CDMO business has been growing rapidly, providing services for over 40 projects. The company has a diverse range of peptide raw materials, with 16 self-developed products available for export [8][90]. 4. Financial Performance - The company achieved revenue of 396 million in 2022, a 2.4% increase year-on-year, with a net profit of 64 million. In 2023, revenue is projected to grow to 434 million, a 9.7% increase, with net profit expected to reach 70 million. The gross margin has slightly declined, while the net margin has improved from 10.74% in 2018 to 16.30% in 2022, indicating enhanced profitability [10][90][96]. 5. Future Outlook - The company is expected to maintain steady growth across its three core business segments, with revenue projections of 594 million and 766 million for 2024 and 2025, respectively. The company’s valuation for 2024 and 2025 is lower than the average of comparable companies, suggesting potential for investment [10][16].