Overview of events

Company 23Q1-Q3 realized revenue of 8.575 billion yuan, yoy+7.9%; return net profit of 1.759 billion yuan, yoy+24.3%; deduction of non-return net profit of 1.64 billion yuan, yoy+15.8%. Among them, 23Q3 realized income / return net profit / deducted non-return net profit of 1.784 billion yuan / 153 million yuan / 99 million yuan, respectively. According to the quarterly report, yoy-25.0%/-58.3%/-72.8%; is mainly due to the large base of respiratory products in the same period last year.

23Q1-Q3 gross profit margin is 61.0% (- 1.0pct), and sales / management / R & D expense rates are 24.4%, 5.0% and 6.9%, respectively (- 3.0/+0.6/+0.0pct). The gross profit margin of single 23Q3 is 58.3% (- 3.3pct), and the sales / management / R & D expense rate is 31.7% 7.6% 10.7% (- 2.6/+2.4/+3.2pct) respectively. According to the data of Tiandi, we analyze that the decline in gross profit margin is mainly caused by the decrease in the gross profit margin of cardio-cerebrovascular products caused by the increase in prices of traditional Chinese medicines and the decrease in the proportion of Lianhua plague with high gross profit margin.

Investment suggestion

We downgrade the company's profit forecast and estimate that the revenue from 2023 to 2025 will be 107,120 and 13.3 billion yuan respectively (the original value is 125,137 and 15 billion yuan), with corresponding growth rates of-15%, 12% and 11%, respectively. The net profit of homing was 20.7,23.4 and 2.64 billion yuan (the original value was 26.0,28.6 and 3.2 billion yuan), and the corresponding growth rates were-12.5%, 13.4% and 12.7% respectively. Corresponding to the closing price of 22.22 yuan per share on October 31, 2023, PE is 18X/16X/14X. Maintain the "overweight" rating.

Risk hint

The risk of slowing down the growth rate of Lianhua Qingwen and collecting and reducing prices; the risk of slowing down the growth rate of cardiovascular and cerebrovascular varieties; the risk that the market promotion of the company's new products is not as expected; the risk that the progress of product development is not as expected.