Deduct the rapid growth of non-net profit and maintain the "buy" rating
The company released semi-annual report for 2023: 2023H1 achieved revenue of 1.819 billion yuan (- 3.72%), net profit of 245 million yuan (- 33.55%), non-net profit of 236 million yuan (+ 77.40%), and net operating cash flow of 138 million yuan (+ 40.61%). The company's performance is in line with our expectations. The decline in revenue and profit is mainly due to the fact that Jiuzhitang Pharmaceutical is no longer included in the scope of the company's consolidated statement after completing the 51% equity transfer in May 2022. The revenue of Jiuzhitang Pharmaceutical included in the statement by 2022H1 is 441 million yuan, and the profit from the transfer of shares is 267 million yuan. Excluding this impact, the company's revenue increased by about 26% compared with the same period last year, and the performance trend is obvious. The company has great potential for out-of-hospital variety volume, mature product matrix, and the company enhances sustained growth through capacity expansion and channel expansion. We maintain the profit forecast for 2023-2025. It is estimated that the 2023-2025 net profit will be 4.38,5.68,739 million yuan respectively, corresponding to EPS of 0.51,0.66,0.86 yuan per share. The current stock price corresponds to 21.9 PE 16.9ppm 13.0 times, maintaining the "buy" rating.
Profitability has improved significantly, increasing channel investment to promote product sales by quarter, the company's Q1/Q2 income is 1.089 billion yuan (- 8.97%) and 730 million yuan (+ 5.3%) respectively; the return net profit is 162 million yuan (+ 30.72%) and 83 million yuan (- 66.1%) respectively; deducting non-net profit is 160 million yuan (+ 77.40%) and 76 million yuan (+ 293.9%) respectively. From a sub-sector point of view, 2023H1 OTC's revenue is 843 million yuan, accounting for 46.32% of revenue, with a gross profit margin of 53.46%; prescription drug revenue is 912 million yuan, accounting for 50.17% of revenue, and gross profit margin is 73.44%. In terms of profitability, the gross profit margin in the first half of 2023 was 62.75% (+ 6.35pct), deducting the non-net profit rate 13.0% (+ 5.9pct), and profitability improved significantly. From the expense side, the sales expense rate in the first half of 2023 was 37.62% (+ 2.62pct), mainly because the company increased channel investment to promote product sales; the management expense rate was 8.74% (- 0.48pct); and the financial expense rate was-0.20% (- 0.22pct).
Further promote the integration of production and marketing and tap the market potential
The company's traditional business sectors further promote the integration of production and marketing, continuously optimize the marketing model, focus on large varieties, develop potential varieties, cultivate new varieties, optimize marketing implementation plans, do a good job in the detailed decomposition and follow-up implementation of indicators, and continuously optimize the allocation of resources. reduce management costs, product resources have been more in-depth mining, and more products have been included in the key training echelon.
Risk hint: the channel promotion is not as expected, and the price of traditional Chinese medicine is rising.