Incidents:
On March 29, 2024, Taiji Group disclosed its 2023 annual report. In 2023, the company achieved operating income of 15.623 billion yuan, +10.58% year over year; realized net profit of 822 million yuan, +131.99% year over year; realized net profit without return to mother of 774 million yuan, +111.35% year over year. 2023Q4 In a single quarter, the company achieved operating income of 3.44 billion yuan, -1.57% year on year; net profit to mother was 64 million yuan, or -35.73% year on year; net profit after deducting non-return to mother was 59 million yuan, +19.96% year over year. The company plans to pay a cash dividend of 3.0 yuan (tax included) for every 10 shares to all shareholders. There will be no bonus shares or capital transfer from the capital reserve fund this year. The annual dividend amount accounts for 20.32% of the company's net profit attributable to shareholders of listed companies in 2023.
Sales of major varieties broke through circles, and long-term growth can be expected
By section, in 2023, the pharmaceutical industry achieved revenue of 10.388 billion yuan, +19.40% year over year, of which modern traditional Chinese medicine achieved revenue of 6.604 billion yuan, +31.64% year over year; chemical pharmaceuticals achieved revenue of 3.784 billion yuan, +2.72% year over year. Core varieties performed well: Taiji Agastache Zhengqi Oral Liquid achieved revenue of 2,271 million yuan, +45% year over year; Express syrup achieved revenue of 881 million yuan, +67% year over year; Tongtian Oral Liquid achieved revenue of 316 million yuan, +10% year over year; pharmaceutical commercial sector achieved revenue of 7.726 billion yuan, -3.31% year over year; Chinese herbal medicine resource business achieved revenue of 1,017 billion yuan, +118.6% year over year.
Accelerate expansion outside the province, and improve profitability significantly
By region, sales revenue in the southwest region in 2023 was 8.274 billion yuan, -0.91% year on year; regional expansion results were remarkable. Sales revenue in East China, North China, and South China increased 29.28%/20.98%/19.97% year-on-year respectively. The company's overall gross margin was 48.60%, +3.17pct year on year, with industrial sector gross margin of 64.74%, +0.62pct year on year; commercial sector gross margin was 9.6%, +0.15pct year on year; the company's overall net margin was 5.46%, +3.04pct year on year, with significant improvement in profitability.
Shareholder return plan for the next three years shows confidence in development
The company announced a shareholder return plan for the next three years (2024-2026). On the premise that the operating conditions are good and the cash flow can meet normal operation and long-term development needs, it will implement an active profit distribution method to return shareholders. The profit distributed in cash every year is not less than 10% of the profit that can be distributed to shareholders in the past three years; the cumulative profit distributed in cash for the last three years is not less than 30% of the average annual distributable profit achieved in the last three years, demonstrating the company's long-term development confidence.
Profit Forecasts and Investment Ratings
Due to short-term fluctuations in the company's performance in 2023, we lowered the company's revenue forecast for 2024-2025 from 219.48/270.50 to 175.80/19.860 billion yuan, and the 2026 revenue forecast to 22.165 billion yuan; the net profit forecast for 2024-2025 was lowered from 1,170/1,533 billion yuan to 1,074/1,291 billion yuan, and the net profit forecast for 2026 was 1,527 billion yuan. Maintain a “buy” rating.
Risk warning: risk of product sales falling short of expectations, risk of industry policy risk, risk of raw material price fluctuations.