APELOA(000739)2025-01-10 00:23Investment Rating - The report initiates coverage with a "Buy" rating for the company [3]. Core Views - The core investment logic highlights the sustained high demand for antibiotic raw materials, with an anticipated turning point for florfenicol. The company's raw material business is expected to maintain stable growth. The entry into the CDMO market demonstrates resilience amid overall market pressures, supported by enhanced R&D capabilities, significant production advantages, and quality customer resources. The integration of raw materials and formulations provides a competitive edge, with new products expected to accelerate growth [1][2]. Summary by Sections Company Overview - The company has a comprehensive industry layout, having evolved from raw material intermediates to include formulations and CDMO services over its 30-year history. It operates seven raw material factories and two formulation factories, with R&D centers in multiple locations, establishing itself as a significant player in the domestic pharmaceutical industry [13][15]. Raw Material Business - The raw material segment, particularly antibiotics, remains a core pillar with a complete industrial chain from core intermediates to formulations. The company is the largest domestic supplier of cefixime raw materials and is positioned to benefit from the anticipated recovery in downstream demand [1][2][15]. CDMO Business - The CDMO segment has shown resilience, with a significant increase in project quotations and ongoing projects. The company has established solid partnerships with 414 global innovative drug companies, including major multinational corporations [2][15]. Formulation Business - The formulation segment is expanding with a diverse product portfolio, leveraging the integration of raw materials and formulations. The company actively participates in centralized procurement policies, with approximately 45% of its formulation business involved in such initiatives [2][15]. Financial Forecast and Valuation - The company is projected to achieve net profits of 1.109 billion, 1.282 billion, and 1.527 billion yuan for 2024, 2025, and 2026, respectively, with corresponding P/E ratios of 16X, 14X, and 12X. The report expresses optimism about the company's growth trajectory [3][4].