Cardio-cerebral vascular category: abundant academic evidence and steady increase in market share. The company's "Tongluo Sanbao" is based on TCM venography, has rich evidence of evidence-based medicine, continues to expand academic influence and enhance market share. Public medical institutions: the market share of Tongshenqi increased from 13.6% in 2015 to 16.9% of 2022H1. Retail terminal: the market share of Tongshenqi has increased from 5.79% in 2017 to 6.40% of 2022H1.
Respiratory system category: Lianhua clear plague stabilized, the growth of new products can not be ignored. Lianhua Qingwen has become a regular drug for many respiratory diseases such as "common cold + influenza + COVID-19". There was a strong positive correlation between the company's sales income and the number of influenza cases reported nationwide in 2019 and before. The COVID-19 epidemic in 2019-2022 brought a new increase to the company's sales of Lianhua pandemic. We believe that "COVID-19 indication" has indeed played an important role in the growth of Lianhua Qingwen in the past three years, but compared with 2019 and before, the drug has greatly improved its brand awareness and terminal coverage. Looking forward to the future, the proportion of "COVID-19 indications" may gradually decrease, and we should also pay attention to the growth potential of "common cold + influenza" indications. We believe that Lianhuaqing cough tablets are 1 billion potential varieties. Lianhuaqing cough tablets were approved to be registered and listed in 2020, and were successfully renewed through health insurance negotiations at the end of 2022 and were included in the new version of the health insurance catalogue. At the same time, they were recommended by COVID-19 and influenza diagnosis and treatment programs in many provinces. Future growth drivers: 1) to promote the transfer of OTC work, will be more conducive to retail terminal volume; 2) is expected to enter the new version of the base drug catalogue, improve the coverage of medical institutions.
The research and development of traditional Chinese medicine is strong, and the ability of commercial promotion is outstanding. The company is currently researching more than 40 innovative varieties of traditional Chinese medicine, and actively develops and declares new drugs independently. In terms of outsourcing, two varieties of gynecological traditional Chinese medicine, Rujietai capsule and Fuxuean tablets, will be added, which is expected to fill the gap in the field of gynecological medicine and actively seek new growth points. The company's innovative layout of traditional Chinese medicine is in a leading position in the industry, while giving sufficient support to the research and development of innovative traditional Chinese medicine at the end of the new drug approval policy, and the company has outstanding commercial transformation capabilities in the industry. The core products "Tongluo Sanbao" and "Lianhua Qingwen" have developed into representative products in their respective fields, we are optimistic about the inheritance and innovative development of the company's traditional Chinese medicine business, and are expected to continue to grow steadily in the future.
Profit forecast and investment advice. In view of the gradual increase in the company's cardio-cerebrovascular market share, new respiratory products are expected to gradually increase, the company has strong research and development of traditional Chinese medicine, and the commercial promotion ability is outstanding. It is estimated that the company will achieve a revenue of 127.93 shock in 2025, a net profit of 25.13 shock, a net profit of 2.865 and 1.94 yuan per share, and an EPS of 1.71 and 1.94 yuan per share. PE is 16.00 PE 14.04 shock 12.39 times, using relative valuation method, combined with comparable company valuation, with reference to 16.48 times PE in 2023, with a target price of 28.25 yuan, giving a "buy" rating.
Risk tips: proprietary Chinese medicine collection risk; traditional Chinese medicine price risk; new product promotion is not as expected.