云南白药(000538)2023年三季报业绩点评:剔除扰动后利润稳增 持续加强研发创新

Yunnan Baiyao (000538) 2023 Third Quarter Report Performance Review: Steady Profit Growth After Removing Disturbances Continues to Strengthen R&D Innovation

國泰君安 ·  11/06/2023

Introduction to this report:

The company released its three-quarter report for 2023. Overall performance was in line with expectations. Revenue and profit increased steadily after removing disruptive factors, strengthened R&D investment and talent introduction, and helped new development in the future.

Key points of investment:

Maintain the “Overweight” rating. The company released its 2023 three-quarter report. The first three quarters achieved revenue of 29.689 billion yuan (+10.3%), net profit of 4.123 billion yuan (+78.9%), net profit of 4.123 billion yuan (+78.9%), and net profit of 2,590 billion yuan (+33.3%), which is in line with expectations overall. Considering the changes in investment income in 23 years and the reduction in fair value fluctuations, and that transactional financial assets have fallen from 2,416 billion yuan at the beginning of 2023 to 287 million yuan at the end of the third quarter, we expect that subsequent disturbances on profit will be significantly reduced. In 2024-2025, the impact on investment income will not be considered, and the 2023-2025 EPS will be raised to 2.45/2.57/2.84 yuan (previously 2.24/2.47/2.72 yuan), referring to the industry average, PE 26X, maintaining the target price of 63.36 yuan.

Profit increased steadily after removing disruptive factors. Q3 had quarterly revenue of 9.379 billion yuan (+5.4%), net profit of 1.295 billion yuan (+61.1%), net profit of 1.125 billion yuan (+61.1%) after deducting non-net profit of 1,116 billion yuan (+6.3%). Due to the impact of investment income, impairment profit and loss, and increase in fair value net income during the same period in 2022, the apparent profit growth rate was clearly disturbed. The growth rate of net profit was significantly faster than deducted non-net profit. The deducted non-net profit growth rate basically matched the revenue growth rate, which better reflects the actual steady growth in performance. It is expected that the performance will grow steadily after the disturbances are cleared in the future. Expense control capabilities are steady. The Q3 sales/management expense ratio was 11.69%/2.25% respectively, year-on-year -0.4pct/+0.4pct. It is expected that it will maintain good fee control capabilities in the future.

R&D expenses continue to rise, and talent introduction is advancing at an accelerated pace to help new development in the future. R&D expenses for the first three quarters were 219 million yuan (+5.17%). A committee was set up to manage the overall R&D system and carefully lay out innovative drugs and AI-assisted drug design. On July 24, Cloud Nuclear Pharmaceuticals (Tianjin), a wholly-owned subsidiary, was established as a nuclear drug research and development platform. It is planned to build a 6,000-square-meter R&D center. By building a proprietary R&D platform, it will lay a good foundation for the layout of innovative drugs. In August, Mr. Li Shaochun, who previously served as the general manager of IBM's medical and life sciences industry in Greater China, was appointed as a digital strategy scientist and general manager of Smart Technology BU. Strengthen R&D and bring in talents to help future innovation and digital development.

Catalysts: Continued strengthening of brand terminal construction, strengthening of online marketing, expansion of new business units Risk warning: Channel expansion falls short of expectations, product sales volume falls short of expectations, risk of fluctuations in investment income

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