云南白药(000538):聚焦主业 强化研发

Yunnan Baiyao (000538): Focus on the main business and strengthen R&D

西南證券 ·  10/31/2023

Event: In the first three quarters of 2023, the company's revenue for the first three quarters was 29.69 billion yuan (+10.3%), net profit was 4.12 billion yuan (+78.9%), net profit after deducting non-return net profit was 3.85 billion yuan (+42.5%).

The market share of toothpaste has been steadily increasing, and major health products have continued to be enriched. Revenue for the third quarter alone was 9.38 billion yuan (+5.4%), net profit was 1.3 billion yuan (+61.1%), and net profit after deducting non-return net profit was 1.12 billion yuan (+6.3%). By the end of the first half of 2023, the company's health division had revenue of 3.25 billion yuan, an increase of 0.8% over the previous year, and its market share continued to increase to 25%. In the first half of the year, the Jinkou Jianyu Rainbow Toothbrush was also launched, which has quickly achieved online and offline channel layout. The company has also developed various products in the dental field, including smart electric toothbrushes, toothbrushes, personalized brush heads, mouthwash, gel, and mouth spray. In terms of the pharmaceutical division, the main product, Yunnan Baiyao Aerosol, had revenue of more than 900 million yuan in the first half of the year, an increase of 18.2% over the previous year. Gradually sorting out the general medicine series products, products such as Putilan anti-inflammatory and Agastache zhengqi water all achieved rapid growth.

The disposal of transactional financial assets has accelerated, and the focus continues to be on the main business to strengthen research and development. The company's non-recurring profit and loss for the first three quarters totaled 270 million yuan, including investment income of 220 million yuan, government subsidies of 110 million yuan, etc. As of the end of the third quarter, the balance of the company's transactional financial assets was 2.87 billion yuan, a year-on-year decrease of 88.1%. The main reason is that the company has disposed of some stocks and fund investments. At present, all stocks have been disposed of, achieving a focus on the main business.

The gross margin for the first three quarters was 27.4%, down 0.8 pp from the previous year. The company's sales expense rate/management expense rate/ financial expense rate/ R&D expense ratio for the first three quarters were 11.3%/2.6%/-0.6%/0.7%, year-on-year -0.2/-0.2/+0.1/-0.04pp. R&D expenses for the first three quarters were 220 million yuan. The company set up an R&D management committee. In the third quarter, Yunhe Pharmaceutical (Tianjin) Co., Ltd., a wholly-owned subsidiary of the company, was established in the Tianjin Pilot Free Trade Zone and will build a 6,000-square-meter nuclear drug research and development center in Tianjin.

Online channels are developing rapidly, and offline coverage is expanding. The company is actively expanding online channels. At the end of the first half of 2023, the share of online channel revenue for the health product line further increased to 16%, and the revenue of nurturing yuanqing increased 90% year-on-year in the first half of the year. In terms of offline channels, the oral care sector launched a series of promotional activities such as “Operation Blue - Refresh Maintenance Power and Better Mouth Health”, with 10,887 sessions carried out, covering 129 cities.

Profit forecasts and investment advice. The company's net profit from 2023-2025 is estimated to be 4.81 billion yuan, 5.6 billion yuan, and 6.05 billion yuan, corresponding to PE 19, 16, and 15 times, respectively. It is recommended to keep an eye on it.

Risk warning: cost control or failure to meet expectations, core product sales or failure to meet expectations, risk of impairment of financial assets.

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