Incident: The company released its 2023 annual report. In 2023, the company achieved total operating revenue of 14.566 billion yuan, an increase of 15.35%; net profit to mother of 4.532 billion yuan, an increase of 9.48% year on year; net profit after deducting non-return to mother was 4.516 billion yuan, an increase of 9.65% year on year.
Shareholders are rewarded with a high percentage of dividends. The company plans to pay a cash dividend of 45 yuan (tax included) for every 10 shares in 2023, and the dividend amount (tax included) accounts for 39.93% of net profit returned to mother in '23. On a quarterly basis, 23Q4 achieved revenue of 3.884 billion yuan (+30.30%) and net profit to mother of 920 million yuan (+36.20%).
Jinsai Pharmaceuticals: Growth hormone maintains resilience. In 2023, Jinsai Pharmaceutical achieved revenue of 11.084 billion yuan, up 8.48% year on year; achieved net profit of 4.514 billion yuan, up 7.05% year on year; net interest rate reached 40.73%, which is still at a high level. Jinsai Pharmaceutical adheres to compliant development. Through promotion models, the speed of development of new customers has increased significantly, and the promotion of long-term water injections has increased. Pure sales, new patients, and new customers have all increased.
Other sectors: Vaccine shingles brought new doses. In 2023, Baike Biotech achieved revenue of 1,825 billion yuan, a year-on-year increase of 70.33%; realized net profit of 501 million yuan, an increase of 175.98% year-on-year. Huakang Pharmaceutical achieved revenue of 703 million yuan, an increase of 6.77% year on year; realized net profit of 37 million yuan, an increase of 17.94% year on year. Hi-Tech Real Estate achieved revenue of 915 million yuan, an increase of 13.81% year on year; realized net profit of 74 million yuan, an increase of 15.63% year on year? Sales expenses have remained stable, and R&D expenses have increased significantly. In 2023, the company's sales expenses were 3.97 billion yuan (+4.29%), and the sales rate was 27.26% (-2.89pp). The company is still actively promoting growth hormone, especially long-acting water injections. Management expenses of 957 million (+16.17%), management fee rate 6.57% (+0.05pp). The R&D cost is 1,723 billion yuan (+26.85%), and the R&D rate is 11.83% (+1.07pp). The company is actively developing growth hormone indications and vaccine research and development. In 2023, the inventory balance was 4.956 billion yuan, accounting for 16.12% of assets (-1.76pp). Accounts receivable and notes receivable amounted to $3.351 billion, accounting for 23% of revenue (+3.68pp)
Profit forecast and investment suggestions: We expect the company's revenue for 2024-2026 to be 161.26, 179.66 billion yuan, and 19.057 billion yuan, respectively, up 10.71%, 11.41%, and 11.08% year-on-year; net profit to mother will be 50.24, 56.15, and 62.41 yuan, respectively, up 10.84%, 11.77%, and 11.14% year on year. The company is a leader in the growth hormone industry and still holds most of the market share. At the same time, a high percentage of dividends are given back to shareholders, maintaining a “buy” rating.
Risk warning: the risk of increased competition for growth hormone, the risk of falling short of expectations in research and pipeline progress, and the risk of price reduction in drug tenders.