Key points of investment
Incident: Jianmin Group released its 2023 annual report. During the reporting period, it achieved revenue of 4.213 billion yuan (YoY +15.72%), net profit of 521 million yuan (YoY +27.78%, adjusted), net profit of 438 million yuan (YoY +17.10%, adjusted); Single Q4 achieved revenue of 1,096 million yuan (YoY +29.52%), net profit to mother of 106 million yuan (+30.53% YoY); performance growth was in line with expectations.
The core business is growing steadily. By industry, the pharmaceutical industry/pharmaceutical business achieved revenue of 21.64 billion yuan respectively, an increase of 15.13%/16.64% over the previous year. By product, pediatricians/gynecology/specialty traditional Chinese medicine/others achieved revenue of 11.44/5.73/2.51/195 million yuan respectively, an increase of 13.67%/3.81%/36.27%/43.24%/43.24%/; sales volume was 0.31/0.17/0.14/0.16 million boxes, respectively, -5.01%/-2.27%/+10.96%/-36.88%, including Longmuzhuang Bone Granules/Spleen Health Blood Granules (tablets) /Xiaojin Capsules/Bench Capsules/Qiweishu Capsules/Children Kangtai Kangtai Granules Year-on-year sales volume year over year Growth of 15.17%/17.76%/5.28%/44.59%/4742.41%/8.01%. By sales model, OTC/RX achieved revenue of 1,106/1,058 billion yuan, an increase of 14.85%/15.43% year-on-year; in the pharmaceutical business, net sales/distribution achieved revenue of 9.00/1,111 billion yuan respectively, +71.04%/-7.26% year-on-year. The “National Health Insurance Catalogue (2023)” abolishes the scope of reimbursement restrictions on Longmuzhuang bone granules and stomach health tablets, which will facilitate the sale and promotion of these varieties in the medical market.
The level of profit is generally stable. In 2023, the company's net interest rate after deduction was 10.41%, an increase of 0.12pct over the previous year (after adjustment). The gross margin/sales expense ratio/management expense ratio/R&D expense ratio were 46.05%/31.91%/4.09%/1.76%, respectively, +2.77/+2.55/+0.36/ -0.25pct.
Jianmin Dapeng achieved net profit of 565 million yuan in 2023, an increase of 26.26% over the previous year. The total investment income reached 231 million yuan, an increase of 42.52% over the previous year. In addition to the joint venture Jianmin Dapeng, the company handed over 100% of its shares in Huafang Healthcare to Liver and Pancreatic Health Technology Company in September 2023 and obtained an investment income of 27 million yuan.
Continue to increase investment in research and development. In 2023, the company launched 27 new drug research and development projects and set up 7 new varieties. The new traditional Chinese medicine Class 1.1 drug Zibeixuan Lung Syrup, the pediatric formulation atomoxetine hydrochloride oral solution, and lacosamide oral solution obtained a drug registration certificate, Citrus Aurantium laxative granules obtained a drug clinical trial approval notice, lactulose oral solution submitted to ANDA and received an acceptance notice, and 7 chemical preparations completed the pilot study.
Give it a “buy” rating. The estimated net profit for 2024-2026 is 6.00/7.15/846 million yuan, up 15.02%/19.27%/18.30% year-on-year, and EPS is 3.91/4.66/5.52 yuan, corresponding to PE14.83x/12.44x/10.51x. Considering that the company has strong brand power and the exclusivity of sports beef yolk, it was given a “buy” rating.
Risk warning: risk of policy adjustments, risk of cost fluctuations, volume of core products falling short of expectations