Revenue was under slight pressure, and profits grew steadily, showing the results of cost reduction and efficiency, and maintaining the “buy” rating
In 2023, the company achieved revenue of 7.703 billion yuan (-6.99% year over year, all figures below); net profit to mother of 445 million yuan (+16.05%); net profit after deducting non-return to mother of 335 million yuan (+33.45%). In terms of profitability, gross margin was 44.82% (+3.3pct) and net margin was 5.9% (+1.24pct) in 2023. On the cost side, the 2023 sales expense ratio was 31.58% (+2.21pct); the management expense ratio was 4.07% (-0.51pct); the R&D expense ratio was 0.93% (+0.08pct); and the financial expense ratio was 0.13% (-0.33pct). We are optimistic about the company's two core businesses, chronic disease management and boutique Chinese medicine, and considering the impact of future expenses such as product promotion, etc., and lowered the 2026 net profit forecast to be 6.11, 7.43, and 899 million yuan (originally estimated 2024-2025 was 6.40 million yuan and 758 million yuan), EPS was 0.81, 0.98, and 1.19 yuan/share, respectively. The current stock price corresponding to PE is 25.6, 21.1, and 17.4 times, respectively, maintaining a “buy” rating.
The revenue growth rate of products in the cardiovascular and gynecological treatment fields, mainly in the cardiovascular and gynecological treatment fields, is impressive by industry. The revenue growth rate of oral agents is 3,055 billion yuan (+5.58%); injection revenue is 1,059 million yuan (+11.09%), other revenue is 105 million yuan (-63.39%); and pharmaceutical and device wholesale and retail revenue is 3.321 billion yuan (-7.4%).
By product, the cardiovascular and cerebrovascular treatment sector's revenue was 2,079 million yuan (+13.67%); orthopedic series revenue was 218 million yuan (-7.34%); antimalarial revenue was 91 million yuan (-18.03%); gynecology revenue was 332 million yuan (+20.61%); digestive system revenue was 535 million yuan (-6.36%); other revenue of 962 million yuan (-13.28%); wholesale and retail revenue of pharmaceuticals and devices was 3.321 billion yuan (-7.4%). Specifically, in the Hemosideron series products to treat cardiovascular and cerebrovascular diseases, oral doses increased 19.44% year on year and injections increased 22.65% year on year; Shu Gan Granules, the core variety of traditional Chinese medicine in Kunming, benefited from rich medical evidence to enter the field of mood treatment, with an increase of 11.11% year over year.
Formulation of a short-, medium- to long-term development strategy. The endogenous epitaxial core business development company will continue to focus on the two core business areas of aging health, chronic disease management, and boutique Chinese medicine. Through a short-, medium- and long-term three-step development action plan, focus on building 37 series products and the “Kunming Traditional Chinese Medicine 1381” brand, and strive to double revenue by the end of 2028. Industrial revenue will reach 10 billion yuan, and continue to firmly establish the development strategy goal of becoming the first stock in the Yinfa Health Industry.
Risk warning: Risk of policy changes, increased market competition, and product sales falling short of expectations.