[Investment points]
The company's performance has maintained a good growth rate. In the first half of 2022, the company achieved operating income of 995 million yuan, +13.13% year on year; net profit of 303 million yuan, +22.54% year on year; net profit of non-return mother was 290 million yuan, +35.19% year on year; and achieved net operating cash flow of 209 million yuan, +4.66% year on year. Looking at Q2 alone, the company achieved operating income of 479 million yuan, +6.44% year on year (Q1 was 517 million yuan, +20.23% year on year); the net profit of the mother was 183 million yuan, +22.0% year on year (Q1 was 120 million yuan, +22.45% year on year). The company has unobstructed sales channels and has maintained stable partnerships with dealers at all levels through an in-depth distribution system and customer relationship management system. At the same time, the company keeps pace with the times. On the basis of maintaining the original marketing, the company continues to promote new operating models such as pharmaceutical+Internet and IP cross-border integration, continuously strengthens the chemical reaction of traditional Chinese medicine culture and brand rejuvenation, and enhances the true monetization ability of brand value.
The company's products are rich and the market position is outstanding. The company adheres to “being China's leading pharmaceutical manufacturing group”
The corporate vision is to continuously consolidate its leading position in the fields of oral and throat medicine and urinary system medication. Currently, the company and its subsidiaries have 218 drug approvals, of which 46 exclusive varieties, 70 product regulations have entered the national essential drug catalogue, 113 product regulations have entered the national medical insurance catalogue, and has 64 valid invention patents (of which 1 is an American invention patent, 1 is a national secret invention patent, and 4 have received the China Patent Excellence Award). The company's main drugs include Sanjin tablets, Guilin watermelon cream, watermelon cream throat lozenges, watermelon cream throat cleanser tablets, brain vein tablets, vertigo tablets (granules), jade leaf detoxifying tablets, lamotrigine tablets, etc. According to Zhongkang retail pharmacy data, the market share of watermelon cream series products in 2020 was about 8.01%.
The company's profitability has increased significantly. 2022H1, the company's sales, management and financial expenses rates were 17.20%, 10.89%, and -0.94%, respectively, and -0.76pct, +2.72pct, +0.74pct, respectively; the R&D expense ratio was 7.84% (-4.03pct); the company's gross profit margin and net interest rate were 72.13% (+2.79pct) and 30.43% (+2.34pct), respectively
[Investment advice]
“Three Gold” is a well-known trademark in China and a long-established brand in Guangxi. According to the 2021 “China's 500 Most Valuable Brands” ranking published by WorldBrand Lab (WorldBrand Lab), “Three Gold”
The brand is worth 11.229 billion yuan. During the reporting period, the company carried out further innovative research on Sanjin tablets and watermelon cream series products in an orderly manner, achieving overall technology, quality, efficacy improvement and product upgrading of the main products, Sanjin tablets and watermelon cream; and completed the acceptance of 2 projects of the Autonomous Region Science and Technology Department's “Advanced Secondary Development and Industrialization Upgrade Study” and “Biopharmaceutical Class II New Drug “Recombinant Anti-VEGF Humanized Monoclonal Antibody Injection”. 3 new invention patents were applied for, and 4 invention patents were authorized.
The company is rich in products, continuously consolidating its leading position in the fields of oral and throat medicine and urological medicine, and continuing to promote the construction of traditional and innovative channels, which is expected to increase product sales and market share. We expect the company's revenue for 2022/2023/2024 to be RMB 2,017/23.23/RMB 2,655 million, respectively, net profit of RMB 408/481/554 yuan respectively, and EPS of RMB 0.69/0.81/0.94, respectively. Give it an “increase in holdings” rating.
[Risk Reminder]
Market competition increases risk;
the risk of falling product prices;
Risk of fluctuations in the cost of raw and auxiliary materials;
