Incident Overview

The company announced an advance performance increase announcement for 2022: it is expected to achieve net profit of 175-190 million yuan (45.75%-58.24%) in 2022; it is expected to reduce non-net profit of 164-179 million yuan in 2022 (51.88%-65.73%); the rapid growth in 2022 performance is in line with our expectations.

Strong growth of Aiting9 and lack of stock in the gastric market affected performance

In 2022, the sales revenue of the company's core products, Aitingjiu and gastroenterology pills, achieved a large increase and maintained a high gross profit margin. Relying on the company's strong commercialization and promotion capabilities in OTC channels, it is expected that growth will continue to grow rapidly in the next few years.

Affected by a combination of factors such as supply-side production capacity and logistics and transportation efficiency, the gastroenterological pill market was out of stock, which had a certain impact on performance during the reporting period.

Investment advice

Affected by the epidemic, earnings forecasts were lowered: the company's revenue for 2022-2024 was adjusted from 8.61/11.13/1,387 million yuan respectively to 787/10.12/1,283 million yuan; the expected 2022-2024 EPS was adjusted from 0.93/1.38/1.88 yuan respectively to 0.78/1.26/1.77 yuan, corresponding to 38.50 yuan/share price on January 19, 2023, and PE 2022-2024 was 49/31/22X, respectively. Maintain a “buy” rating.

Risk warning

The risk of product promotion falling short of expectations, the risk of insufficient supply of agency products, and the risk that performance forecast data may differ from the final annual report