The business structure continues to be optimized, and profitability is developing steadily, moderately and positively. With modern traditional Chinese medicine as the main focus, Tianshili has formed an industrial layout with multi-directional development of traditional Chinese medicine, chemical medicine, and biopharmaceuticals. In recent years, the company has continued to optimize and integrate its business, focusing on the development of the pharmaceutical industry. Since 2023, performance fluctuations caused by business integration and financial asset disposal have gradually weakened, and profit levels have been developing steadily, moderately and positively. The company's total revenue for the first three quarters of 2023 reached 6.57 billion yuan, an increase of 7.15% over the previous year. The pharmaceutical industry sector is expected to bring new performance growth to the company.
Based on the internationalization of modern traditional Chinese medicine, we will build the number one brand in the industry. Against the backdrop of policy support and a gradual increase in public recognition, the traditional Chinese medicine industry is developing rapidly, and the market continues to expand. With the main product compound salvia drip pills as the core, the company has promoted a series of leading brand products such as serum nourishing brain pellets (pills), astragalus ginseng tablets, injectable yiqi complex, and injectable salvia polyphenolic acid, etc., and has built a modern traditional Chinese medicine system focusing on cardiovascular and cerebrovascular medicine. The core product, compound salvia, treats coronary heart disease and angina pectoris. A number of related mechanistic research results have been published, and sales rank among the highest in the cardiovascular and cerebrovascular proprietary medicine market. At the same time, at 127 clinical research centers in 9 countries and regions around the world, Compound Danshen Dripping Pills successfully completed phase II and phase III clinical trials with international multi-center randomized double blind and large samples, achieving a landmark breakthrough in the internationalization of modern traditional Chinese medicine. In October 2021, compound salvia was approved to add the main treatment function for diabetic retinopathy, further enhancing the scope of application and core competitiveness of compound salvia in the market. Products such as serum brain granules/pills and astragalus ginseng and qi drop pills also showed good growth.
Establishing a “four-in-one” R&D model, the product pipeline is constantly being enriched, and the company's core competitiveness continues to improve.
The company advocates a “four-in-one” drug innovation research and development model with independent R&D, product introduction, cooperative research and development, and priority investment in market licensing, and continuously optimizes the graded layout of traditional Chinese medicine, biopharmaceuticals, and chemical products. Currently, we have a R&D pipeline covering 92 products under development, including 41 Class 1 innovative drugs, 39 have entered clinical trials, and 25 are in phase II and III clinical trials. In terms of product internationalization, two international clinical trials of T89 for the treatment of chronic stable angina pectoris and prevention of acute plateau syndrome (AMS) are under way. In terms of product internationalization, AMS has completed phase III clinical trials.
Investment advice: With the continuous optimization of the company's graded product portfolio, the company's business revenue is expected to reach 91.8/100.1/10.85 billion yuan in 2023-2025, and net profit to mother will reach 12.5/14.1/16.01 billion yuan.
The current PE stock price is 16/15/13 times, respectively. The current valuation level is comparable to the average PE of comparable companies. Considering that the company's future performance is growing, it was covered for the first time, and a “careful recommendation” rating was given.
Risk warning: risk of changes in industry policy; risk of R&D innovation; risk of fluctuating raw materials; risk of falling product prices; risk of increased competition.