Event
On August 8, 2023, the company released the semi-annual report of 2023. 2023H1 achieved operating income of 1.819 billion yuan,-3.72% year-on-year, 245 million yuan of net profit, 33.55% of the same period last year, and 236 million yuan of non-return net profit, + 77.40% of the same period last year.
2023Q2 achieved operating income of 730 million yuan, + 5.35% year-on-year; net profit of 83 million yuan,-66.08%; and non-return net profit of 76 million yuan, + 293.91%.
Analysis and comment
The performance recovered obviously in the second quarter, deducting the year-on-year growth rate of non-homed net profit and the decline in 2023H1 operating income compared with the same period last year was mainly due to the sale of a 51 per cent stake in the subsidiary Jiuzhitang Pharmaceutical, which was no longer included in the company's consolidated statement, with an impact of 441 million yuan. The net profit belonging to the shareholders of listed companies increased and decreased by 33.55% over the same period last year, mainly due to the investment income generated by the transfer of 51% equity of Jiuzhitang Medicine in the same period last year, which belongs to non-recurrent profits and losses. The net profit after deducting non-recurring profits and losses belonging to shareholders of listed companies increased by 77.40% over the same period last year, mainly due to the increase in product sales, the increase in comprehensive gross profit margin, and the decrease in management expenses and investment losses. In the first half of 2023, the company's overall gross profit margin was 62.75%, year-on-year + 6.36%; period expense rate was 42.81%, + 1.30%; sales expense rate was 37.62%, year-on-year + 2.62%; management expense rate was 5.39%, year-on-year-1.10%; financial expense rate-0.20%, year-on-year-0.22% The rate of R & D expenditure is 3.35%, which is + 0.62% compared with the same period last year.
In a single quarter, the company's performance recovered obviously in the second quarter, and the year-on-year growth rate of non-return net profit was remarkable. 2023Q2 achieved operating income of 730 million yuan, + 5.35% year-on-year, and deducted non-home net profit of 76 million yuan, + 293.91% year-on-year.
The growth rate of proprietary Chinese medicine has increased significantly, traditional business has strengthened its foundation and sources, and the market potential has been deeply tapped. According to 2023H1, the company's revenue of proprietary Chinese medicine reached 1.748 billion yuan, an increase of 19.80% over the same period last year. The growth rate of this plate increased significantly, mainly due to the volume of the company's core products such as Liuwei Dihuang Pill, Lujiao Buxue granule, Angong Niuhuang Pill and other company core products of Jiuzhitang (Changsha base), driving the company's traditional Chinese medicine plate to achieve rapid growth. At the same time, Chengdu Jinding Pharmaceutical Co., Ltd. and Hainan Pharmaceutical Co., Ltd., subsidiaries of the company, have achieved growth over the same period last year by firmly implementing the reform of the integration of production and marketing, opening up the grade medical market, mainly promoting key products, and looking for opportunities for the development of grass-roots terminals.
In the first half of 2023, the company's revenue from proprietary Western Medicine was 3 million yuan, down 99.25% from the same period last year, mainly due to the fact that it was no longer included in the consolidated statement after the transfer of 51% equity in Jiuzhitang Pharmaceutical in May 2022. Revenue of biopharmaceuticals reached 24 million yuan, down 31.28% from the same period last year, but Siqikang, the main product of subsidiary Siqi Biology (BCG Polysaccharide Nucleic Acid injection), has been included in the catalogue of key varieties cultivated in Hunan Province, and the market share of products is expected to further increase in the future.
Speed up the secondary development of listed products, insist that new product innovation R & D companies focus on more than 10 million varieties and exclusive (exclusive) varieties, and systematically carry out pharmaceutical research, pharmacology and toxicology, clinical effectiveness re-evaluation project research on key products such as Shuxuetong injection, Tianma Gouteng granule, Bushen Gu Tooth Pill, Ejiao, Angong Niuhuang Pill, Liuwei Dihuang Pill, Lujiao Buxue granule, etc. Improve the clinical value data support of the product.
The YB209 project (i.e. LFG project) of the company's R & D center has officially started the clinical trial and completed all the laboratory tests of the group dose group; the YB211 project has submitted the clinical trial application to the Drug Review Center of the State Drug Administration and has been formally accepted; the classic prescriptions YB106 and YB107 of traditional Chinese medicine have been promoted normally according to the project R & D plan.
In addition, the Ⅰ phase clinical trial of ischemic tolerant human bone marrow mesenchymal stem cells in the treatment of ischemic stroke in Beijing Meike is progressing smoothly and has been evaluated and approved by the State Drug Administration to enter the clinical trial of phase a (that is, phase II). At the same time, Beijing Meike successfully passed the on-site inspection of "self-discipline Standard for quality Management of Stem Cell preparation" issued by China Medical Biotechnology Association, and won the "qualification Certificate of quality Management of Stem Cell preparation".
Investment suggestion
We keep our profit forecast unchanged. We estimate that the company's revenue for 2023 to 2025 will be RMB 41.1 billion, an increase of 14.6%, 18.2%, 18.5%, and a year-on-year increase of 18.5%, 24.5%, 22.3%, respectively, and a corresponding valuation of 29X/23X/19X. Maintain a "buy" rating.
Risk hint
Industry policy risk; drug price reduction risk; raw material supply shortage and price fluctuation risk.