Event: the company released its three-quarter report in 2023. In the first three quarters, the operating income, net profit and non-return net profit in the first three quarters were respectively 17.19 yuan, 4.61 million yuan, and 3.33%, respectively, compared with the same period last year. 5.50%, 0.35%, 3.33%. The net cash flow of business activities was 958 million yuan, + 1.32% compared with the same period last year. Among them, Dain Pharmaceutical realized business income and net profit of 1.686 million yuan respectively, which was 8.61% compared with the same period last year. The performance was slightly lower than the market expected.
Comments:
Due to the steady growth of revenue of Dain Pharmaceutical Industry, the increase of R & D investment in Q3 leads to short-term profit fluctuations. The company's 2023Q1-Q3 single-quarter revenue was 5.61 million yuan, respectively, compared with 5.92 million yuan in the same period last year, compared with-7.28 percent, 4.50 percent, 4.72 percent, and 1.64 percent, 1.58 million yuan, respectively, and the year-on-year + 4.94 percent, 6.39 percent, 11.93 percent, respectively. The weak performance in the third quarter was related to Wolong School's cessation of cooperation, Walter Information loss and increased investment in research and development of Dain Pharmaceutical Co., Ltd.
The revenue of core subsidiary Dain Pharmaceutical 2023Q1-Q3 is RMB 581 million, compared with the same period last year, which is + 2.98%, 6.59%, 5.55%, and the net profit is RMB 314, 272 million, and + 10.13%, 19.71%, 3.82%, respectively. The revenue growth in the third quarter alone is steady, and the decline in profit is related to the increase in R & D investment.
The company's profitability continues to be strong, and liquidation Walter Information helps optimize assets. 2023Q1-Q3 Dain Pharmaceutical has a net interest rate of 53.5%, a year-on-year + 1.7pp, and its profitability remains strong. In the same period, the gross profit margin of Walter Dain is 86.02%, year-on-year + 6.04pp, which is related to Wolong School's cessation of cooperation in running schools; the net profit margin of sales is 51.86%, year-on-year + 4.30pp During the period, the expense rate is 25.71%, year-on-year + 1.67pp, in which the sales / management / R & D / financial expense rate is respectively year-on-year + 3.50/-1.91/+1.18/-1.10pp, management expenses and financial expenses are further optimized, while the increase in sales expense rate is related to the resumption of post-epidemic marketing activities. The company will increase investment in research and development, further consolidate the leading position of children's drugs, and continue to promote the listing and promotion of new products. On October 20, the company announced that the wholly-owned subsidiary Walter Information, which continues to lose money and is insolvent due to poor management, intends to apply for bankruptcy liquidation. we believe that this measure will further optimize the asset structure, focus on the main pharmaceutical industry, and be beneficial to the long-term development of the company. Since 2020, Dain Pharmaceutical Co., Ltd. has made great efforts to achieve the rapid release of business performance. In July this year, Dayin Pharmaceutical's medium-and long-term incentive plan was filed by Shandong SASAC, and its performance is expected to maintain steady and rapid growth in 23-25 years.
Profit forecast, valuation and rating: as a leading enterprise of children's medicine, Watdain has the advantages of brand and channel, the income of core products is growing rapidly, the channels and new products continue to expand, and the momentum of state-owned enterprise reform is strong. Taking into account the drag on non-main businesses and increased investment in marketing and research and development, the estimated homing net profit for 23-25 is reduced to 5.61 million (compared with the last reduction of 9%, 10%, 11%), an increase of 6%, 21%, 17% over the same period last year, and the current share price is corresponding to PE times 13-11-9, maintaining the "buy" rating.
Risk tips: Ikexin sales fall short of expectations; market competition intensifies; risk of failure in new drug research and development.