Incident review
On March 8, 2024, the company issued an announcement on the “Double Improvement of Quality and Return” action plan. In the plan, the company proposed various specific measures such as adhering to the main pharmaceutical business, adhering to innovation as the core, continuously improving the quality of credit disclosure, consolidating the foundation of governance, focusing on shareholder returns, and social responsibility.
Management analysis
On January 22, 2024, the executive meeting of the State Council stated that it is necessary to further improve and improve the basic system of the capital market, pay more attention to the dynamic balance of investment and financing, vigorously improve the quality and investment value of listed companies, increase the entry of medium- and long-term capital into the market, and enhance the internal stability of the market. In order to protect the interests of all shareholders and implement the “investor-based” development concept, the company formulated a “double improvement in quality and return” action plan based on confidence in the company's future development prospects and recognition of value.
The layout of the pharmaceutical industry continues to improve and continue to be innovation-driven. The company will continue to promote the improvement of market-based institutional mechanisms, diversified business pipelines, international development paths, and differentiated competitive strategies, concentrate resources for development, consolidate and enhance the market position of core leading products, and further improve medium- to long-term brand management strategies. The company will continue to promote the high-quality development of the company's “new round of entrepreneurship” based on the development concept of “sufficient stock, incremental refinement”; it will strive to improve brand value, corporate value and investment value, build a second growth curve with high expectations, high technology, and high barriers, and achieve rapid multi-product and multi-channel development.
Dividends have been implemented for many years in a row, and a shareholder value return mechanism has been implemented. The company has continued to implement cash dividends for 11 consecutive years, fully balancing the relationship between the company's current development and long-term planning, and protecting the rights and interests of small and medium-sized shareholders on a positive level. The company has formulated the “Shareholder Return Plan for the Next Three Years (2023-2025)”. For the next three years, under the conditions of cash dividends, the company will distribute no less than 40% of the distributable profit achieved in the current year. The company will continue to coordinate the dynamic balance between performance growth and shareholder returns according to its development stage, share development results with investors, and implement a long-term, stable and sustainable shareholder value return mechanism.
Profit Forecasts, Valuations, and Ratings
The company's leading position in growth hormone is stable, and the long-term growth logic remains unchanged. We expect the company to achieve net profit of 47.8 (+15%), 55.1 (+15%), and 6.22 billion yuan (+13%) in 2023-2025, respectively, and EPS of 11.81, 13.61, and 15.38 yuan, respectively, corresponding to the current P/E of 11, 9, and 8 times, respectively. Maintain a “buy” rating.
Risk warning
Health insurance price reduction and cost control risks; growth hormone competition increases risks; product sales fall short of expectations; R&D progress falls short of expectations, etc.