云南白药(000538):业绩略超预期 单三季度毛利率同比提升

Yunnan Baiyao (000538): Performance slightly exceeded expectations, and gross margin increased year-on-year in the third quarter

中金公司 ·  11/02/2023

1-3Q performance slightly exceeded our expectations

The company announced 1-3Q23 results: operating income of 29.689 billion yuan, up 10.3% year on year; net profit of 4.123 billion yuan, up 78.9% year on year, net profit after deducting non-return net profit of 3.853 billion yuan (YoY +42.46%). Net profit slightly exceeded our expectations, mainly due to the narrowing of the company's 3Q23 asset impairment losses and positive returns from changes in fair value.

Development trends

Revenue and non-net profit maintained steady growth in 3Q23, and asset impairment improved significantly. In the third quarter alone, revenue was 9.379 billion yuan, up 5.40% year on year; net profit was 1,295 billion yuan, up 61.05% year on year; and net profit was reduced by 1,116 billion yuan, 6.28% year on year. The 3Q23 company accrued asset impairment losses of RMB 6.02 million, while 3Q22 was RMB 29.43 million; the asset impairment losses of the 1-3Q23 company recovered by RMB 12.99 million, and the loss of 1-3Q22 was RMB 622 million during the same period, a significant improvement over the previous year. The profit from changes in fair value for the 3Q23 quarter was 50.56 million yuan, while 3Q22 had a loss of 335 million yuan.

The company's gross margin increased year-on-year in Q23 alone, mainly due to further optimization of the product structure. In the third quarter alone, the company's gross margin was 27.0%, up 0.4 percentage points from the previous year. The sales expense ratio was 11.7%, down 0.4 percentage points from the previous year, the management expense ratio was 2.2%, up 0.4 percentage points from the previous year, and the R&D expense ratio was 0.8%, down 0.1 percentage points from the previous year. As of the end of the 3Q23 period, the company's transactional financial assets had a book balance of 287 million yuan, a significant decrease from 2,416 billion yuan at the beginning of 2023 and 1,541 million yuan at the end of the 1H23 period, mainly due to the company's disposal of all Xiaomi Group shares and some fund investments held by the company.

We expect to maintain a good development trend in all business segments in the 1-3 quarter. According to the company announcement, during the 1H23 period, 1) the Pharmaceutical Division continued to strengthen its business focus, improve operational efficiency, and promote performance growth. The Baiyao series maintained a good growth trend, and other brands of traditional Chinese medicine products achieved impressive growth. 2) In terms of the health products division, the oral care sector seizes opportunities to increase brand exposure in multiple dimensions and drive user growth through an online and offline “two-pronged approach”; anti-withdrawal products maintain a rapid development trend, and focus on consolidating the two key areas of brand terminal building and joint promotion. 1H23 achieved a 90% year-on-year revenue growth rate.

Profit forecasting and valuation

Considering improvements in asset impairment and credit impairment this year, we raised our 2023 net profit by 3.7% to $4.304 billion, keeping our 2024 profit forecast unchanged. The current stock price corresponds to a price-earnings ratio of 21.3 times /19.4 times in 2023/2024. Maintaining an outperforming industry rating and the target price of 69.40 yuan, corresponding to 29.0 times the 2023 price-earnings ratio and 26.5 times the 2024 price-earnings ratio, there is room for improvement of 36.1% compared to the current price-earnings ratio.


New product promotion fell short of expectations; epitaxial expansion fell short of expectations; raw material prices rose.

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