公司核心产品三金片和西瓜霜系列是各自领域头部中药品牌。随着品牌力强化，产品市占率提升，资产经营效率也明显得到提升。2018-2021 年，母公司应收项目周转天数处于下降趋势。2021 年，母公司ROE 从疫情影响中恢复并创新高到18%，资本回报率ROIC 达到34%。 2023 年，品牌中药业务在疫后复苏和新产品驱动下，进入到成长新阶段。Key points of investment
Value revaluation: Real profit has reached a new high, and there is room for higher value revaluation. The company's operating business profit in 2021 has recovered from the low point of the epidemic in 2020 and reached a record high of 540 million, but the strategic losses of R&D subsidiaries increased, leaving the apparent consolidated net profit of only 340 million. As a result, changes in stock prices did not reflect internal changes in the drastic improvement in operating business. According to operating business profit valuation, there is room for higher value revaluation.
The main branded traditional Chinese medicine business has entered a new stage of growth
The company's core products, Sanjin tablets and watermelon cream series, are leading traditional Chinese medicine brands in their respective fields. With the strengthening of brand power, the market share of products has increased, and asset management efficiency has also improved markedly. The number of turnaround days for parent companies' receivables was on a downward trend in 2018-2021. In 2021, the parent company's ROE recovered from the impact of the pandemic and reached a record high of 18%, and the return on capital ROIC reached 34%. In 2023, the branded Chinese medicine business entered a new stage of growth, driven by post-epidemic recovery and new products.
As an innovative drug R&D and production platform, Shanghai Sanjin Biotech is an important part of the “One Two Wings” strategy. Shanghai Sanjin Biotech's Baochuan Biology and Baifan Biotech are the company's innovative drug R&D and production platforms, and are an important layout for the “One in Two Wings” strategy. The merger of innovative drug R&D subsidiary Baochuan Biotech and Saijin Biotech became a turning point in the revaluation of innovative drug assets. Baifan Biotech, an antibody manufacturing subsidiary, began undertaking bioCMO business for external customers. Both major biopharmaceutical R&D and production platforms are in a new stage of extensible development.
Profit forecasting and valuation
We expect the company's revenue in 2022-2024 to be 1,999 million/2,264 million/2,604 billion yuan respectively, with a year-on-year growth rate of 13%/15%/15%, net profit of 326 million/486 million/615 million yuan respectively, and a year-on-year growth rate of -5.15%/48.99%/26.62%; corresponding PE is 31.72 x/21.27x/16.81x, respectively. Considering that the company's OTC business accounts for a relatively high share, we selected Chinese medicine companies China Resources 39, Yunnan Baiyao, and Ling Rui Pharmaceutical, which also have an OTC layout, as comparable companies. At the same time, considering that the company's 2023-2024 growth rate was higher than that of comparable companies, we gave the target company 25 times PE in 2023, corresponding to 20.69 yuan, with room for 18% increase, covering the “increase in holdings” rating for the first time.
Risk warning
Risk of price fluctuations of Chinese herbal medicines; risk of failure in innovative drug development; risk of biopharmaceutical CMO capacity utilization falling short of expectations.
