Key points of investment
Steady progress in business development
In the first three quarters of 2023, the company achieved operating income of 29.689 billion yuan, up 10.30% year on year; achieved net profit of 4.123 billion yuan, up 78.90% year on year; net cash flow from operating activities was 2,590 billion yuan, up 33.33% year on year; basic earnings per share was 2.31 yuan/share, up 50.98% year on year; the company's weighted average return on net assets was 10.48%, a sharp increase of 4.45 percentage points year on year, and business development progressed steadily.
Focus on the main business and invest carefully
As of the end of September 2023, the balance of the company's transactional financial assets was 287 million yuan, down 88.13% from the beginning of the year.
The main reason is that all Xiaomi Group shares held by the company were disposed of in the third quarter (stock code:
HK.01810) and some fund investments. Under the principle of further focusing on the main business and prudent investment, the company withdrew from all secondary market securities investments in the third quarter of 2023, and plans not to carry out secondary market securities investment business in 2024.
Continuous and stable dividends
From 2019 to 2022, the company's cash dividend ratios were 91.60%, 89.13%, 73.22% and 90.37%, respectively. The total cash dividends for each year were RMB 3.832 billion, RMB 4.917 billion, RMB 2,053 billion and RMB 2,712 billion, respectively. The company's recent cash dividend plan fully takes into account reasonable returns to investors, takes into account the long-term interests of all shareholders and the company's sustainable development, and maintains the continuity and stability of the profit distribution policy.
Profit forecasting and valuation
The estimated 2023-2025 revenue is 399.05/436.88/47.958 billion yuan, up 9.36%/9.77% year on year; net profit to mother is 48.42/54.59/6.0.80 billion yuan, up 61.34%/12.74%/11.38% year on year, EPS is 2.69/3.04/3.38 yuan, corresponding PE is 18.34/16.27/14.60x, respectively. Considering that the company is a leader in the Chinese medicine industry and is actively seeking a second growth curve, it was given a “buy” rating.
Risk warning
Risk of policy adjustments, risk of cost fluctuations, new product promotion falling short of expectations