Event description
The company released its mid-2023 report that revenue in the first half of 2023 was 3.635 billion, down 2.57% from the same period last year; net profit was 302 million, up 39.8% from the same period last year; and 291 million was deducted from non-net profit, an increase of 30.3% over the same period last year. Among them, 2023Q2 achieved revenue of 1.948 billion, an increase of 4.18% over the same period last year, a net profit of 180 million, an increase of 39.74% over the same period last year, and a deduction of 165 million of non-net profit, an increase of 30.3% over the same period last year.
Event comment
Reduce non-core business and improve profitability. The growth rate of apparent income in the first half of the year was affected by the company's focus on core brand operation business and the reduction of non-core business: 1) the wholesale distribution business achieved revenue of 1.402 billion in the first half of 2023, down 23.14% from the same period last year. It is mainly the sale of its subsidiary Beijing Wanwei Pharmaceutical Co., Ltd. (now renamed heavy Medicine Wanwei (Beijing) Pharmaceutical Co., Ltd.) at the end of July 2022. 2) Retail business, with revenue of 177 million yuan in the first half of 2023, down 10.61% from the same period last year, mainly from Beijing Baiyanghuikang Wisdom Pharmacy Co., Ltd., which was sold at the end of October 2022. The overall growth rate of the profit end of the company in the first half of 2023 was higher than that of the revenue side, mainly because the proportion of the core business of making profits increased again. The gross profit margin of the brand operation business was 44.15%, the gross profit was 901 million, and the gross profit accounted for 83.66%. At the same time, the profit margin of the non-core business increased slightly after integration, and the gross profit margin of the wholesale distribution business was 11.09%, an increase of 1.65pct over the same period last year.
Focus on the core business CSO, the original research import Becton Dickinson & Co accelerated. In the first half of 2023, the revenue of core brand operation CSO business was 2.041 billion, an increase of 20.20% over the same period last year, while 2023Q1 affected hospital variety sales due to factors such as concentrated infection, and brand operation CSO growth was only 10.97%. After calculation, 2023Q2 brand operating CSO revenue growth rate of 29%. According to the split varieties in the first half of the year, 1) the core brand Di Qiao series achieved revenue of 877 million, an increase of 9.76% over the same period last year. 2) Hailu realized revenue of 263 million, an increase of 25.24% over the same period last year. 3) in November 2022, the company won the exclusive marketing right for the mainland market of Anlize, a diabetes drug operated by AstraZeneca PLC for many years, and achieved rapid volume and revenue contribution in the first half of 2023, and 2023H1 achieved revenue of 109 million.
MNC customer cooperation deepens, the value of the platform is released. In recent years, the company continues to expand its cooperation with mainstream pharmaceutical companies, and its professional commercial platform capability has been recognized by many mainstream upstream pharmaceutical companies. Not only global well-known multinational enterprises such as Roche, Astair and AstraZeneca PLC entrust important products to the company through all channels, but also more and more start-up innovative pharmaceutical companies seek cooperation, reflecting the company's good reputation and brand effect in MNC cooperation.
We expect the company to achieve a net profit of 655 million yuan / 878 million yuan / 1.181 billion yuan in 2023-2025, with a "buy" rating of 18 times / 14 times / 10 times the previous share price.
Risk hint
1. The progress of newly introduced brand promotion is not as expected.
2. The expansion of brand matrix is not as expected.