Revenue is growing steadily, and profit margins are increasing year by year. Established in 2005, Baiyang Pharmaceutical is a professional pharmaceutical product commercialization platform. Its main business is to provide comprehensive marketing services for pharmaceutical product manufacturers, including providing brand operation, wholesale distribution and retail sales of pharmaceutical products, and is committed to becoming a link between pharmaceutical products and downstream consumers. In 2019-2022, the company's revenue increased from 4.849 billion yuan to 7.510 billion yuan, with a CAGR of 15.70%; profit due to mother increased from 210 million yuan to 502 million yuan, with a CAGR of 33.74%; and net interest rate increased from 4.35% to 6.46%, an increase of 2.11 pct. With 2023Q1-Q3, the company achieved revenue of 5.496 billion yuan, a year-on-year increase of -0.43%; realized profit to mother of 494 million yuan, an increase of 43.29% over the previous year.
Focus on the brand's operation business and shape multiple success stories. Brand operators are a product of the specialized and refined development of the pharmaceutical industry. Providing brand operation services for imported drugs is an important source of demand in the brand operation industry. After years of operation, the company has become a leading commercialization platform for health brands in China. In 2022, the gross profit of the brand operation business accounted for more than 80%, shaping many core brand cases such as DiQiao, Pitech, and Hailu. According to Baiyang Pharmaceutical's prospectus, quoting data released by the China Non-Prescription Drug Association, Diqiaowei D calcium chewables ranked second, first, and second among vitamin and mineral products in China in 2015-2017, 2018, and 2019, respectively. In 2022, the company's core brand Diqiao series achieved revenue of 1,628 billion yuan, an increase of 18.16% over the previous year; the core brand Beite series achieved revenue of 329 million yuan, an increase of 6.00% over the previous year; and the Hailu series achieved revenue of 427 million yuan, an increase of 43.09% over the previous year.
We have been committed to building platform value for a long time, and we are optimistic about the development of new brands in the future. Most of the company's management teams are from large professional pharmaceutical companies, have many years of experience, and have unique opinions on the current situation and future of the pharmaceutical industry. All of the company's internal subsidiaries and segments, such as brand product marketing and promotion, retail and brand management, and pharmaceutical informatization, etc., have professional practitioners in this industry segment, enabling the company to develop its advantages in various fields and lay a solid foundation for the company to build a complete pharmaceutical commercialization platform ecosystem. Through the accumulation of many years of brand operation experience, the company has established a mature brand operation strategy and process, and formed a brand management system based on category research. Currently, the company has formed a multi-brand matrix in the four major categories of OTC and DaHealth, OTX and other prescription drugs, severe drugs such as oncology, and high-end medical devices, and products in related fields are constantly increasing.
Investment advice: We predict that the company's net profit for 2023-2025 will be 660 million yuan, 880 million yuan, and 1,138 million yuan, respectively, up 31.5%, 33.3%, and EPS of 1.22, 1.67, and 2.16 yuan respectively. Considering the company's leading domestic CSO, the continuous increase in commercial platform value and the continuous accumulation of operating project experience, we give it 25-30 times PE in 2024, corresponding to a reasonable value range of 41.75 to 51.00 yuan, giving it “better than “Big Market” rating.
Risk warning. The risk of concentration in brand operation, drug quality risk, policy risk, and market competition exacerbates the risk.