Incident Overview
Recently, the company released its 2023 semi-quarterly report. 23H1 achieved revenue of 6.791 billion yuan (yoy +21.99%), gross profit margin of 61.7% (-0.5pct), net profit of 1,606 billion yuan (yoy +53.16%), net return interest rate of 23.7% (+4.8 pct); net interest rate of 23.7% (+4.8 pct) after deducting non-net profit of 1,541 billion yuan (yoy +46.67%);
Among them, 23Q2 achieved revenue of 2,856 million yuan (yoy +0.40%), gross profit margin of 57.3% (-6.1 pct), net profit of 404 million yuan (yoy -28.49%), net return interest rate of 14.1% (-5.7 pct), net interest rate of 14.1% (-5.7 pct), minus non-net profit of 363 million yuan (yoy -35.26%).
The Q2 return profit margin was clearly under pressure, mainly due to a large year-on-year decline in gross margin and low sales expenses in the same period last year. Among them, the gross margin was 57.29% (-6.13pct), mainly due to the increase in the price of Chinese herbal medicines and the decline in the share of Lianhua Qingfeng, which has a higher gross margin; the sales expense ratio was 27.77% (+2.04pct), mainly due to the fact that the company spent less money after the outbreak of the 22Q2 epidemic, and 23Q2 showed a recovery trend.
Cardiovascular products recovered steadily, second-tier patented traditional Chinese medicine contributed an incremental 23H1 anti-cold drug revenue of 3,088 billion yuan (yoy +21%), with a gross profit margin of 68.2% (+0.2pct). We estimate that Lianhua Qingfeng is 25-26 billion yuan and Lianhua Qingfeng is about 400 million yuan, and the arrival of the influenza season in autumn and winter is expected to catalyze demand; cardiovascular drug revenue is 2,511 billion yuan (yoy +11%), gross profit margin of 60.5% (-4.4 pct), and the share of other patent markets has steadily increased; Pharmaceutical products Revenue of 277 million yuan (yoy +46%), gross profit margin of 64.7% (+7.6pct); other main business revenue of 912 million yuan (yoy +69%), gross profit margin of 42.2% (+16.0pct); investment advice
Maintaining the company's profit forecast, the company's revenue for 2023-2025 is expected to be 125, 137, and 15 billion yuan, respectively, with corresponding growth rates of 0%, 10%, and 9%, respectively; net profit of attributable income is 26.0, 28.6 billion yuan, and 3.2 billion yuan, corresponding growth rates of 10%, 10%, and 12%, respectively, and EPS is 1.56, 1.71 and 1.92 yuan respectively. Corresponding to the closing price of 23.17 yuan/share on August 30, 2023, PE is 15X/14X/12X. Maintain the “increase in holdings” rating.
Risk warning
The risk of a slowdown in Lianhua Qingfeng's growth rate and a reduction in procurement prices; the risk of a slowdown in the growth rate of large cardiovascular varieties; the risk that the company's new product marketing fell short of expectations; and the risk that product development progress fell short of expectations.