Incident: Jianmin Group released its 2023 annual report, achieving revenue of 4.213 billion yuan (YoY +15.72%); net profit attributable to mother of 521 million yuan (+27.78% YoY); net profit after deducting 438 million yuan (YoY +17.10%). The performance growth rate was in line with expectations.
Leading products are rising steadily, driving the rapid growth of the pharmaceutical industry. The pharmaceutical industry achieved revenue of 2.164 billion yuan (YoY +15.13%), of which Longmu sold 623 million bags (YoY +15.17%); the “National Health Insurance Catalogue (2023)” removed restrictions on the scope of reimbursement of Longmu to promote the hospital; Bengtong capsules sold 294 million capsules (+44.59% YoY), and refined KA chain operations increased product sales rate; Qirui Weishu capsules sold 25 million capsules (YoY +4742.41%), negotiated to enter the “National Health Insurance Catalogue (2022)”, and the hospital coverage rate upgrade. The pharmaceutical business achieved revenue of 2,010 billion yuan (+16.64% year over year), and the subsidiary actively expanded its business to drive revenue growth; other sectors achieved revenue of 0.39 million yuan (+3.15% year over year). Among them, traditional Chinese medicine diagnosis and treatment maintained a good momentum, and the third traditional Chinese medicine center, the Wuchang branch, officially opened. Furthermore, the company terminated the medical business after transferring 100% of the shares of Huafang Healthcare, a wholly-owned subsidiary.
Ye Kaitai's intelligent manufacturing base upgrade project is underway, and profitability continues to improve. The gross margin of the pharmaceutical industry and pharmaceutical business in 2023 was 77.75% (+0.9pcts year on year) and 12.07% (year over year +4.86pcts), respectively. Commercial gross margin increased significantly, mainly benefiting from the increase in retail revenue (+149.32% year over year). In November 2023, the company launched the Ye Kaitai Intelligent Manufacturing Base Construction and Production Expansion and Upgrade Project (Phase II). The construction period of the project is 18 months, which will further increase the company's gross profit margin in the future.
There is steady demand in the sports training business. In 2023, the company's investment income in joint ventures and joint ventures was 185 million yuan (+23.16% year over year), of which the participating subsidiary Jianmin Dapeng achieved net profit of 565 million yuan (+26.26% year over year), continuing to benefit from the rise in natural beeswax prices.
Maintain a “buy” rating. The company's net profit for 24-26 is estimated to be 6.20/7.72/948 million yuan, EPS is 4.04/5.03/6.18 yuan, respectively. Currently, the corresponding stock price valuation is 14.0x/11.3x/9.2x, respectively.
In view of the company's strong brand, strong marketing strength, and moat for sports training, it maintains a “buy” rating.
Risk warning: risk of release of beef yolk in physical cultivation, risk of harvesting and landing, product sales falling short of expectations, etc.