The “Pharmaceutical+Finance+Big Health” multi-wheel drive established pharmaceutical enterprise company has been deeply involved in the pharmaceutical industry for many years. The company takes pharmaceuticals as its core business, actively lays out the big health sector, and also holds a large number of high-quality financial assets and makes extensive investments, gradually forming a large-scale enterprise with the “pharmaceutical+finance+big health” multi-wheel drive model.
Traditional Chinese medicine has been growing steadily. Relying on the core product development gradient, traditional Chinese medicine products have progressed steadily in recent years. In 2022, Chinese medicine's revenue was 1,692 billion yuan, accounting for 59.01% of revenue. Traditional Chinese medicine has gradually formed a structure based on the three core products of Anshen Brain Solution, Pediatric Chai Gui Antipyretic Oral Solution, and Xuefu Juyu Oral Liquid, while actively cultivating related gradient products. Among them, Anshen Brain Solution's sales revenue in 2022 exceeded 600 million yuan. It is the company's core product at present, and is in a leading position among similar products. The future prospects for traditional Chinese medicine formula granules are broad. The company is actively planning to expand related production capacity, which is expected to seize the highest ground in the industry.
Chemicals bottomed out and rebounded, and the big health business is booming
The main types of chemicals, ribonucleic acid II and calf spleen extract injections, have been affected by relevant national policies in recent years, and sales revenue has declined. Among them, ribonucleic acid II was released in 2023. Calf spleen extract injections currently account for a small share of chemicals, and the company is actively cultivating other potential varieties, and the chemical business is expected to rebound. The company's health business has developed rapidly in recent years, with revenue of 204 million yuan in the first half of 2023, an increase of 303.76% over the previous year. The company combines traditional e-commerce with a new digital e-commerce live streaming model to promote the rapid development of the health business.
GF Securities provides a margin of safety and high-quality assets to feed back medicine
GF Securities has provided stable income for the company over the years. As of the first half of 2023, the company and its subsidiaries held 19.72% of GF's total share capital. In the first half of 2023, the company's investment income in GF Securities was 843 million yuan, an increase of 11.78% over the previous year. At the same time, the company set up a pharmaceutical fund to focus on investing in related emerging pharmaceutical companies, seeking future cooperation, and feeding back the main pharmaceutical industry.
Investment advice and profit forecasting
We expect the Chinese medicine business to grow steadily, the chemical medicine business to recover steadily, and the traditional Chinese medicine formula granules and health business is expected to increase the company's performance. We forecast the net profit of the pharmaceutical business in 2023-2025 of $2.76 billion ($3.26/379 million). The pharmaceutical business corresponds to a market value of 4.89 billion yuan in 2024. The company holds shares in GF Securities with a corresponding market value of 17.48 billion yuan, and the company's target total market value is 22.37 billion yuan. The current market value is 18.1 billion yuan. Covered for the first time, a “gain” rating was given.
Risk warning
Pharmaceutical industry policy risk, risk of price fluctuation of traditional Chinese medicine raw materials, risk of product sales falling short of expectations