Main points of investment
The company's performance grew steadily in the first half of the year, and Wolong School stopped cooperating in running schools as a drag on apparent performance. In the first half of 2023, the operating income was 1.153 billion yuan, down 5.88% from the same period last year, and the net profit was 322 million yuan, an increase of 5.65% over the same period last year. The non-net profit was 303 million yuan, an increase of 2.19% over the same period last year. Both revenue and profit are weighed down by Wolong School's suspension of cooperation in running schools. 2023H1 net profit rate 53.96%, year-on-year increase of 7.39pct, mainly due to the cessation of education business and the improvement of company management; gross profit margin 86.21%, year-on-year increase of 6.15pct, sales expense rate 20.45%, year-on-year increase of 3.61pct, management expense rate 3.96%, year-on-year decrease of 2.14pct, R & D expense rate 2.11%, year-on-year decrease of 0.5pct. Q2 realized operating income of 592 million yuan in a single quarter, down 4.5% from the same period last year, and its net profit was 158 million yuan, an increase of 6.39% over the same period last year, deducting 149 million yuan from non-net profit, an increase of 5.76% over the same period last year.
The growth trend of the subsidiary Dain Pharmaceutical Industry is good, the growth rate in the second quarter is faster than that in the first quarter, and the profitability continues to improve. On the basis of the high growth in 2022, Dain Pharmaceutical maintained a sustained growth momentum in the first half of 2023, achieving an operating income of 1.131 billion yuan, an increase of 4.81% over the same period last year, a net profit of 629 million yuan, an increase of 14.72% over the same period last year, and a net interest rate of 55.6%, raising 4.80pct over the same period last year. Q2 achieved revenue of 581 million yuan in a single quarter, an increase of 6.60% over the same period last year, a net profit of 314 million yuan, an increase of 19.73% over the same period last year, and a net interest rate of 54.04%, an increase in 5.92pct over the same period last year. The company adheres to the overall strategy and the core marketing strategy of "expert authoritative recommendation, convenient channel purchase and professional category education" to continuously improve the penetration of the main products Ikexin; at the same time, it increases the promotion of new products. The sales of products such as Dexin, Diane Iron and Diane calcium have increased greatly compared with the same period last year.
Profit forecast and valuation: considering that Wolong School stopped running a school together and incurred a certain loss, and according to the operating situation in the first half of the year, we adjusted our profit forecast. It is estimated that the net profit from 2023 to 2025 will be 6.14,7.43,895 million yuan respectively, an increase of 16.5%, 21.0% and 20.5% respectively over the same period last year. On August 18, 2023, the closing price corresponding to PE is 12.8,10.6 and 8.8 X, and the "overweight" rating is maintained.
Risk tips: product collection price reduction, sales below expectations, negative public opinion, fluctuations in the number of births, increased competition, raw material price fluctuations and other risks.