Events:
On August 29, 2023, the company released its mid-2023 report that in the first half of 2023, the company achieved operating income of 3.635 billion yuan, down 2.57% from the same period last year; net profit from home was 302 million yuan, up 39.76% from the same period last year; and 291 million yuan was deducted from non-return net profit, which was 30.25% from the same period last year. 2023Q2 achieved operating income of 1.948 billion yuan, an increase of 4.18% over the same period last year, a net profit of 180 million yuan, an increase of 39.74% over the same period last year, and a non-return net profit of 165 million yuan, an increase of 30.30% over the same period last year.
Comment
Continuous optimization of revenue structure, focusing on core brand operation business
After restoring the two-vote business, 2023H1 achieved operating income of 4.203 billion yuan, down 2.55% from the same period last year, mainly due to the company's focus on core brand operation business and the decline in non-core business revenue.
From the perspective of business, the revenue of 2023H1 core business brand operation is 2.041 billion yuan, + 20.20% compared with the same period last year, and the proportion of revenue has increased from 49.27% at the end of 2022 to 56.16%. If the two-vote business is restored, the operating income will be 2.609 billion yuan, + 14.43% compared with the same period last year. The gross profit margin of the brand operation business is 44.15%, the gross profit is 901 million yuan, and the gross profit accounts for 83.66%, which is the main source of profit contribution of the company, and the trend of business structure optimization is obvious. the revenue of the wholesale distribution business is 1.402 billion yuan, down 23.14% from the same period last year, and the scale continues to shrink; the retail business achieved revenue of 177 million yuan, down 10.61% from the same period last year.
The volume of core varieties is in line with expectations, and the sales ability of retail channels highlights the steady growth of 2023H1's core varieties. The core brand Di Qiao series realized income of 877 million yuan, + 9.76% compared with the same period last year. If the two-vote business was restored, the income was 914 million yuan, + 9.07% compared with the same period last year; and the operating income of Hailu was 263 million yuan, + 25.24% compared with the same period last year. The newly signed variety Anlize in November 2022 achieved an income of 109 million in the first half of 2023. If the two-vote business is restored, the income will be 129 million yuan, and the capacity of retail channels will be highlighted.
The strength of the third-party commercialization platform has been recognized, and we are optimistic about the double increase in revenue and performance under the expansion of the brand matrix, and Baiyang Pharmaceuticals has successively reached cooperation with the first Sankong, Novartis China, Leibo Ruichen, etc., the brand matrix has been further enriched, at the same time, the company has recently signed a strategic cooperation agreement with Gilead Sciences Inc to jointly explore innovative medical solutions and service models, and the marketing ability of retail channels has been further recognized. 2023H1's gross profit margin is 29.64%, an increase of 3.03pct over the same period last year. We believe that with the continuous optimization of the income structure, the company is expected to achieve both revenue and performance growth.
Profit forecast and rating
Considering that the company continues to reduce its wholesale and distribution business, the overall revenue is slightly affected, but the proportion of brand operation business, which is the core source of profit, is gradually increasing, which is expected to lead to a corresponding increase in gross profit margin. Therefore, the operating income forecast for 2023-2025 is reduced from 83.38 pound 95.83 billion yuan to 79.48 pound 87.46 trillion yuan, and the homing net profit forecast is maintained at 6.41 billion yuan 803 billion yuan. Maintain a "buy" rating.
Risk tips: product concentration risk; cost increases risk; new product volume is less than expected risk