In 2023, the company achieved revenue of 7.703 billion yuan (-6.99% YoY), net profit of 445 million yuan (YoY +16.05%), net profit of 335 million yuan (YoY +33.45%); of these, the fourth quarter achieved revenue of 2,092 billion yuan (+0.14% YoY, +13.70%), net profit to mother of 59 million yuan (YoY +458.75%, -63.92% month-on-month), net profit of 25 million yuan (YoY +388.53%, YoY -81.53%) .
Revenue declined slightly due to adjustments in the commercial sector, and profits from improving quality and efficiency increased. Affected by the optimization of the commercial sector structure and the decline in foreign aid business, the company's revenue fell 6.99% year on year in 2023, but the company promoted the optimization of the industrial product structure and improved quality and efficiency, and net profit to mother increased by 16.05%. By business, the cardiovascular business with the Hessuketong series as its core achieved revenue of 2,079 billion yuan, an increase of 13.67% over the previous year. Among them, injectable hemosideron (freeze-dried) increased by 22.65% year on year, oral administration increased 19.44%, achieved better growth through collection and medical insurance restrictions; the gynaecology business revenue was 332 million yuan, an increase of 20.61% year on year, and the core product Shugan Granule accelerated the out-of-hospital layout to achieve 11.11% growth; orthopedic series, antimalarial products, and digestive products declined slightly due to factors such as in-hospital compliance and reduced foreign aid business.
The strategy for the first year of integration has become more clear, and the quality of operations has improved markedly. 2023 is the first year of the company's integration into China Resources 39 system, successfully completed the restructuring of management and board of directors, and jointly determined the strategic goal of becoming a leader in quality Chinese medicine and a leader in the field of geriatric health and chronic disease management. On the one hand, the internal structure was clarified and the three major divisions of “KPC1951 and Kunming Traditional Chinese Medicine 1381 and 777” were established to anchor the “Yinfa Health” industry and promote the construction of the 37 7 and Artemisia industry chains; on the other hand, marketing reforms were initiated to establish a “reasonable coverage, rapid circulation, and effective sales” Kunming Pharmaceutical commercial channel system based on the use of 39 commercial channels.
A five-year development plan was issued to anchor long-term growth. In the first year of entering China Resources Group, the company released a five-year (2024-2028) strategic plan, using the development of the Yinfa economy industry as an opportunity to release a five-year (2024-2028) strategic plan, with “inheriting fine Chinese medicines, with the 37 industrial chain as the core, based on aging health, expanding the field of chronic disease management, and becoming the first stock in the Yinfa health industry”. It strives to double revenue by the end of 2028 and reach the target of 10 billion yuan in industrial revenue by the end of 2028, guiding the company's medium- to long-term growth.
Maintain a “Highly Recommended” investment rating. We are optimistic that the company will focus on the strategic advantages of the “healthy aging” circuit, clarify the business structure, promote quality and efficiency, and adjust the 2024-2026 revenue forecast to 87.1/96.9/10.73 billion yuan, up 13.1%/11.2%/10.7% year on year, and net profit to mother of 5.6/7.1/9.1 billion yuan, up 25.3%/27.8%/28.3% year on year. The corresponding PE is 30/23/18 times, maintaining the “highly recommended” investment rating.
Risk warning: policy risk, market promotion falling short of expectations, R&D failure, raw material rise risk, etc.