Event
On October 25,2023, Fangsheng Pharmaceutical released the third quarter report of 2023. In the first three quarters of 2023, the Company realized operating income of CNY 1.215 billion, with a year-on-year decrease of 10.76%; net profit attributable to parent was CNY 142 million, with a year-on-year decrease of 45.27%; net profit deducted from non-parent was CNY 122 million, with a year-on-year increase of 69.90%.
Event comment
The revenue end is affected by centralized procurement, and the profit end Baijun Medical is stripped off. In the first three quarters, the non-high growth rate is deducted by 23Q3, and the operating income is RMB 360 million yuan.(-25.73%), the decrease is mainly due to Baijun Medical not included in the scope of merger in October 2022 and the decrease in sales price of ezetimibe tablets entering centralized procurement;Q3 net profit attributable to mother is RMB 35 million yuan (-82.02%), the profit end changes greatly, mainly due to the large investment income generated by the disposal of Baijun Medical equity in the same period of last year; the net profit deducted from non-parent in the first three quarters is RMB 122 million yuan (+69.90%);Q3 is RMB 34 million yuan (+8.04%), with good deduction growth and continuous optimization of profitability of pharmaceutical industry.
The main business focuses on the industrial sector, and the income from children's drugs and respiratory drugs continues to grow. From the perspective of main business sectors, the industrial subtotal income is 1.084 billion yuan (+3.44%); the medical business income is 28 million yuan (-86.94%), and the decrease is mainly due to the divestiture of Baijun Medical, with the core business gradually concentrated; the pharmaceutical commercial income is 57 million yuan (+17.29%). According to products, the revenue in the first three quarters of cardiovascular and cerebrovascular diseases was 270 million yuan.(-21.04%), the sales price of ezetimibe tablets into centralized procurement decreased; the revenue in the first three quarters of anti-infective drugs was RMB 61 million yuan (-0.32%); the income in the first three quarters of children's medication was 137 million yuan (32.42%); the income in the first three quarters of gynecological diseases was 72 million yuan (-15.61%); the income in the first three quarters of skeletal muscle system medication was 269 million yuan (-5.53%); the income in the first three quarters of respiratory system medication was 156 million yuan (+65.52%), and the sales of the base drug product Qiangli Loquat Paste (honey refining) were good.
Xiaoer Jingxing Zhike Granule and Huangge Jiangu Tablet are expected to be included in the basic medicine catalogue. Xiaoer Jingxing Zhike Granule is mainly used for cough and expectoration caused by exogenous cold in children. It is a special medicine for children. It has good curative effect on cough and other cold symptoms. As the core product of the company's skeletal muscle plate, Garcinia Jiangu Tablet has obvious curative effect advantages in treating knee osteoarthritis and other symptoms. Two core products are expected to be included in the base drug list.
The innovative drug of cardiovascular and cerebrovascular traditional Chinese medicine, Noriton, is ready to launch, and the future market prospect is considerable. The innovative drug of traditional Chinese medicine, Noriton Granules, has obtained the Phase III clinical study summary report, and has been submitted to the State Food and Drug Administration for project registration. Nuolitong Granule is based on the modified formula of Shengxian Decoction, a representative prescription of Zhang Xichun, a famous modern Chinese medicine master. It can improve the condition of cerebral blood supply deficiency, quickly relieve headache and dizziness symptoms, and can be widely used in clinical treatment of recurrent tension headache, and has achieved remarkable curative effect.
Investment advice: maintain a "buy" rating
We maintain the previous forecast revenue of 18.84/22.30/27.01 billion yuan from 2023 to 2025, with a year-on-year increase of 5%/18%/21% respectively, and the net profit attributable to the parent company is 1.71/2.25/3.00 million yuan respectively, with a year-on-year increase of-40%/32%/33% respectively (22 years due to the transfer of equity of Baijun Medical). Investment income, the company's net profit base is relatively high, 286 million yuan; net profit deducted from non-parent is 107 million yuan), corresponding valuation is 25X/19X/14X. Maintain "buy" investment rating.
Risk hint
Policy change risk; product quality control risk; R & D risk