Incident Overview

The company released its report for the third quarter of 2022: the first three quarters achieved revenue of 1,067 million yuan (+41.96%), net profit of 149 million yuan (+112.2%) after deducting non-return mother's net profit; the third quarter alone achieved operating income of 399 million yuan (+58.48%), net profit of 47 million yuan after deducting non-return mother's net profit (+159.30%); the performance exceeded expectations.

Growth accelerated in the third quarter, and gross margin continued to rise

The company's revenue for the third quarter alone reached a record high of 399 million yuan in a single quarter, mainly due to the rapid release of 12 types of vitamins and various trace elements in its core products. The company's gross margin is also continuing to increase. The gross profit margin for the first three quarters was 52.46%, up 2.34 percentage points from the same period last year.

Reduce the value of R&D pipeline meters and consolidate performance

The company sorted out R&D assets during the reporting period. Combined with increased uncertainty factors such as pharmaceutical collection, some R&D projects that were heavily influenced by industry policies, limited market space, fierce product competition, and low return on investment showed signs of impairment. The company reported impairment of 24 million yuan for the third quarter.

Investment advice

The company's profit forecast was raised: the company's revenue for 2022-2024 is expected to be adjusted from 14.33/19.45/2,542 billion yuan respectively to 1,473/20.17/2,649 billion yuan; the expected 2022-2024 EPS will be adjusted from 0.40/0.61/0.85 yuan respectively to 0.44/0.67/0.94 yuan, corresponding to the closing price of 15.50 yuan/share on October 26, 2022, PE 35/23/17 times, respectively; maintaining the “buy” rating.

Risk warning

Risk of price reduction in medical insurance for core products, risk of new product promotion falling short of expectations, risk of collection