Key points of investment
Industrial revenue growth was steady in the first three quarters, key products performed well, and the overall performance of the third quarter was slightly under pressure. The first three quarters of 2023 achieved operating income of 5.793 billion yuan, an increase of 4.13% over the previous year, net profit of 858 million yuan, an increase of 17.73% over the previous year, and net profit of 842 million yuan after deducting non-return net profit of 842 million yuan, an increase of 29.8% over the previous year. In the single quarter of 2023, Q3 achieved operating income of 1,755 million yuan, a year-on-year decrease of 4.67%, net profit of 136 million yuan, a year-on-year decrease of 47.84%, and net profit after deducting non-return net profit of 130 million yuan, a year-on-year decrease of 29.64%. Q3 In a single quarter, investment income in joint ventures and joint ventures was 16 million yuan, down 48% from the previous year, which was a certain drag on the profit side. In the first three quarters, the company's industrial revenue increased by 12.9% year on year; commercial revenue fell 4% year on year; key varieties of quick-acting heart-saving pills, cleansing pills, Angong Niuhuang pills, and Jingwanhong Ointment all achieved double-digit year-on-year growth in sales revenue and sales volume.
Profitability increased in the first three quarters, and profit margins declined slightly in the third quarter. The gross profit margin for the first three quarters of 2023 was 44.86%, up 3.86pct year on year, net profit margin 14.54%, up 1.12pct year on year, sales expense ratio 25.11%, up 2.73 pct year on year, management expense ratio 4.39%, down 0.46pct year on year, R&D expense ratio 1.49%, down 0.17pct year on year. The net interest rate for the 2023Q3 quarter fell by 7.52pct. In addition to factors such as investment income, gross margin decreased by 0.53pct, sales expenses increased by 1.06pct, and management expenses increased by 0.46pct.
Profit forecast and valuation: According to the company's operating conditions, we adjust our profit forecast. We expect to achieve net profit of 10.28, 12.76, and 1,563 billion yuan in 2023-2025, a year-on-year increase of 19.2%, 24.1%, and 22.5%. Corresponding to the closing price of November 2, 2023, PE is 22.00, 17.72, and 14.47 times, maintaining the “increase in holdings” rating.
Risk warning: Risks such as fluctuations in raw material prices, falling short of expectations, increased market competition, increased integration and efficiency, falling short of expectations, and changes in the harvesting or policy environment.