Event: in the first three quarters of 2023, the company achieved a total income of 1.215 billion yuan, down 10.51% from the same period last year; the net profit returned to the mother was 142 million yuan, down 45.27% from the same period last year; and the non-net profit was deducted from 122 million yuan, an increase of 69.60% over the same period last year.

The revenue of pharmaceutical manufacturing has increased steadily, and the financial indicators are greatly affected by subsidiaries. In the single quarter of 2023Q3, the company achieved revenue of 360 million yuan, down 25.73% from the same period last year; realized net profit of 35 million yuan, down 82.02% from the same period last year; deducted non-net profit of 34 million yuan, an increase of 8.04% over the same period last year, and achieved positive growth after deducting non-net profit.

Revenue from pharmaceutical manufacturing increased by 3.44% during the reporting period. The income of pharmaceutical industry products such as Qiangli loquat paste (honey refining), Qiangli loquat dew, Pudi blue anti-inflammatory tablets, montmorillonite powder and other pharmaceutical industry products increased steadily, while the cumulative income of innovative traditional Chinese medicine Xuan Qijiangu tablets exceeded 19 million yuan. The decline in revenue from the same period last year was mainly due to the fact that Hunan Hengxing Pharmaceutical Technology Co., Ltd., and Baijun Medical were no longer included in the scope of the merger; the sharp decline in net profit from the same period last year was mainly due to the large investment income generated by the disposal of Baijun Medical equity in the same period last year. In addition, the loss-making subsidiaries of the medical services sector are no longer included in the scope of consolidated statements, resulting in a large increase in deduction of non-net profit compared with the same period last year.

Product pipeline multipole growth, collection affects the cardio-cerebral vascular pipeline. A series of drugs for respiratory system and children contributed greatly to the growth, with income in the first three quarters up 65.52% and 32.42% respectively compared with the same period last year. The company's cardiovascular and cerebrovascular pipeline products Yizaimaimai cloth tablets entered the collection in November 2022, and the decline in product sales prices led to a decline in sales, while resulting in a decline in overall revenue of 21.04% in the first three quarters of the use of cardiovascular and cerebrovascular diseases.

Profit forecast and valuation suggestion: the company focuses on the pharmaceutical industry, and the "338 Project" establishes the momentum of the company's development. It is estimated that the company's revenue from 2023 to 2025 will be 1.93 billion yuan, 2.23 billion yuan, respectively, and its net profit will be 1.7 billion yuan, 2.2 billion yuan, respectively, maintaining the "buy" rating.

Risk tips: the risk of product price reduction, the risk of intensified competition in the industry, and the risk of loss of core technology and business personnel.