百洋医药(301015):二季度业绩超预期 品牌运营长期价值有待重估

Baiyang Pharmaceutical (301015): Second quarter results exceeded expectations, and the long-term value of brand operation needs to be reassessed

國盛證券 ·  08/31

The company released its 2023 mid-year report. 2023H1 achieved revenue of 3,635 million yuan (-2.57% year on year, same below), realized net profit of 302 million yuan (+39.76%), and realized net profit of 291 million yuan (+30.25%) after deducting non-return net profit. In a single quarter, 2023Q2 achieved revenue of 1,948 million yuan (+4.18%), net profit of 180 million yuan (+39.74%), and net profit of 165 million yuan (+30.30%) after deducting non-attributable net profit.

The results for the second quarter exceeded expectations, and the company took the initiative to reduce its wholesale distribution business, causing the apparent revenue growth rate to decline.

2023Q2's revenue and profit growth rates were 4.18% and 39.74%, respectively. The slow growth rate of the company's overall revenue is mainly due to 2023H1 wholesale distribution business accounting for 39%, which still has a big impact on the revenue side (2022H1 wholesale business accounts for 49%). In order to focus on developing brand operation business, the company sold its subsidiary Beijing Wanwei Pharmaceutical Co., Ltd. at the end of July 2022. The 2023H1 wholesale distribution business achieved revenue of 1,402 billion yuan, a decrease of 23.14% over the previous year. The performance exceeded expectations mainly because the brand operation business 2023H1 achieved revenue of 2,041 billion yuan (+20.20%), which grew rapidly, and 2023H1 gross profit accounted for 83.66%, which strongly contributed to a high increase in overall profit.

Revenue from core products of brand operation can be expected, and gross profit is steadily increasing. 1) The 2023H1 DiQiao series achieved revenue of 877 million yuan (+9.76%). Through promotion through new media channels such as Douyin and Xiaohongshu, DiQiao's OTC, health products, cross-border food, and Xiaohuangjiao series products continued to grow, with a gross margin increase of 2.69 pct over the same period last year. 2) 2023H1 Hailu (dry eye drops) achieved revenue of 263 million yuan (+25.24%), occupies a leading position in the retail eye drops market, and is expected to maintain a rapid volume trend in the second half of the year.

3) 2023H1 Anritsu (diabetes treatment drug) achieved revenue of 109 million dollars. Since AstraZeneca handed over its marketing rights in mainland China to the company in November 2022, the company focused on “people with poor blood sugar control after meals” to achieve rapid release.

The strength of the brand matrix is strong, and stable and high performance growth is expected to drive the revaluation of the company. From 2022Q3 to 2023H1, new partnerships in the company's brand operation business include: Novartis (pazopanib tablets, product name:

Viquant), First Sankyo (transino, effective skincare), AstraZeneca (saxagliptin tablets, trade name: Anrize), Roche (calcitriol capsules, brand name: Rogaiquan), Novartis (pezopanib, trade name: Viquant), Suzhou Tongxin (fully magnetically suspended artificial heart), etc. The new varieties will gradually contribute increased performance to the company after a three-month handover period. It is expected that they will maintain a good momentum in the second half of the year, and as the number of cooperative products continues to increase, the market will increasingly recognize the value of the company's platform.

Profit forecasting and valuation. The company is expected to achieve net profit of 654 million yuan, 818 million yuan, and 1,028 million yuan in 2023-2025, an increase of 30.2%, 25.2%, and 25.6% over the previous year. The corresponding PE for 2023-2025 was 19X, 15X, and 12X respectively, maintaining the “buy” rating.

Risk warning: risk of brand operation and concentration of business; risk of negative impact of pharmaceutical policies; risk of increased market competition.

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