Description of the event

The company released its report for the third quarter of 2023. In the third quarter of 2023, it achieved revenue of 1,861 million yuan, an increase of 4.03% over the previous year; realized net profit of 192 million yuan, an increase of 49.24% over the previous year; and realized net profit of 192 million dollars, an increase of 32.47% over the previous year.

Incident comments

Deductions have maintained an increase of more than 30%, which can be expected throughout the year. In the first three quarters of 2023, the company achieved a cumulative non-net profit of 484 million yuan, a year-on-year increase of 31.29%, and high annual performance growth can be expected. The company achieved revenue of 5.496 billion yuan in the first three quarters, which was basically the same as the previous year. Mainly, the company's wholesale distribution business and retail business were compressed: the subsidiary Beijing Wanwei Pharmaceutical Co., Ltd. (now renamed Heavy Medicine Wanwei (Beijing) Pharmaceutical Co., Ltd.) was sold at the end of July 2022; the subsidiary Beijing Baiyang Huikang Smart Pharmacy Co., Ltd. was sold at the end of October 2022.

Focusing on core business CSO, BD accelerates. Since the beginning of this year, the company has added new brand operation cooperation, such as Novartis Pharmaceuticals' Vientiane, Suzhou Tongxin's fully magnetic levitation artificial heart, and Daiichi Sankyo's Transcendence. At the same time, it has also added new partners such as Gilead Science, a major multinational pharmaceutical company, and a partnership with domestic biotechnology company Laibrichen. BD's expansion has accelerated, demonstrating the value of the company's commercialization platform.

MNC customer cooperation deepens, and platform value is unleashed. In recent years, the company has continued to expand cooperation with pharmaceutical companies, and its professional commercialization platform capabilities have been recognized by many pharmaceutical companies. Not only have world-renowned multinational companies such as Roche Pharmaceuticals, Astellas, and AstraZeneca entrust important products to the company through all channels, but more and more innovative pharmaceutical companies in the start-up period are seeking cooperation, reflecting the company's good reputation and brand effect in MNC cooperation.

We expect the company to achieve net profit of 656 million yuan/854 million yuan/1,093 million yuan/1,093 million yuan in 2023-2025. The corresponding valuation of the current stock price is 28 times /21 times /17 times, giving it a “buy” rating.

Risk warning

1. The progress of newly introduced brand promotion fell short of expectations;

2. The expansion of the brand matrix fell short of expectations.