Revenue/profit increased steadily in 2023. I am optimistic that Jinsai/Baike's new products will drive subsequent growth. The company will achieve revenue/net profit/net profit deducted to mother of 145.7/45.3/4.52 billion yuan in 2023 (up 15.4/9.5/ 9.6% year over year), of which 4Q23 revenue/net profit to mother/net profit after deducting non-net profit increased 30/36/ 31% year over year. The company's revenue/profit grew steadily over 23 years, mainly due to the steady growth of Jinsai powder acupuncture, and the long-term promotion of the 100g heavy shingles vaccine was ideal in the first year. Looking ahead to 24 years, considering the increase in the long-term revenue share of growth hormone and the continued growth of Jinsai's new product sales + the 100g blisters vaccine, but considering the increase in subsequent R&D expenses, we are optimistic that the company's net profit will grow 16% year-on-year in 24, and expect the company's EPS to be 12.97/14.88/16.85 yuan in 2024-2026. We gave the company 16 times PE for 24 years (23 times PE discounted compared to the company's 24 year wind agreed to expect due to the potential collection risk of growth hormone) and obtained a target price of 207.52 yuan, maintaining a “buy” rating.

Jinsai: Leading growth over a long period of time, with non-core new products creating the second growth engine for children, Jinsai achieved revenue/net profit of 11.08/4.49 billion yuan (+8.5/ 7% yoy) in 23, with 4Q23 growing at a low base. We expect Jinsai to achieve steady growth within 24 years: 1) It is expected to achieve double-digit revenue growth within the year of winning the bid. Complete specifications for water needles and expansion of indications are promising that revenue will remain stable; 3) Improved long-term beneficial injection methods+PEG self-production. We expect sales to continue to grow in 24 years (accounting for about 29% of growth hormone revenue in 23 years). Furthermore, the company's non-core products for children (children's nutrition, women's health, adult endocrinology, medical aesthetics, etc.) have been excellent since their launch (23 revenue has contributed nearly 10%). We are optimistic that the company will continue to improve the “Paediatric + Gynecology” pipeline layout in the future, and the long-term or contribution will be considerable in sales.

100g: The first year of sales of the shingles vaccine was impressive. In 24 years, we are optimistic that Baike will achieve revenue of 1,825 million yuan (+70% yoy) and net profit to mother of 208 million yuan (+176% yoy). The high revenue/profit increase during the year was mainly due to the rapid release of the high-mowry shingles vaccine in the first year of marketing (contributing about 800 million in revenue in 23 years), while revenue from the acne/nasal spray influenza vaccine remained stable. Looking ahead to 24 years, we are optimistic that 100g revenue will continue to increase. Consider: 1) the return in demand for batch issuance of acne vaccines/nasal spray vaccines; 2) blisters have completed entry into various provinces, and sales will continue to grow. In addition, new products in the company pipeline include: 1) the nasal spray influenza vaccine is about to be approved for marketing; 2) Phase I of Baibai has been completed (preparations for phase III are in progress), and we estimate that it may be accepted for marketing in 25; 3) adjuvant influenza vaccine, recombinant shingles vaccine, HSV-2 vaccine, and Hib vaccine will soon be declared for clinical trials in 2024.

Huakang focuses on innovation in traditional Chinese medicine. Real estate is optimistic about contributing to stable cash flow. Huakang achieved revenue of 703 million yuan (+6.7% yoy) in 2023, and net profit of 17.75 million yuan (+18% yoy) to mother. We expect the steady growth of major varieties such as Thrombopharmacin tablets and Ginhuacin tablets in 24 years+the company will continue to explore the value of potential varieties such as Lung Ning Granules and Clear Granules, and the estimated revenue will increase in single digits over the same period last year. Real estate achieved revenue/net profit of 915/074 million yuan (+14/ 16% yoy) in 2023, of which 4Q revenue was less confirmed. The whole year was mainly driven by 3Q delivery to the Gaoxin Rongyuan Community. In the future, it is optimistic about steady multi-format and diversified development, and contributing to stable cash flow.

Risk warning: collection risk, vaccine sales falling short of expectations, new product development failure, and commercialization risk.