Key points of investment
Incident: In 2023, the company achieved revenue of 15.62 billion yuan (+10.58%, up 10.58% year on year, same below), net profit to mother of 820 million yuan (+131.99%), and net profit after deducting non-return to mother of 770 million yuan (+111.35%), which is in line with previous performance forecast expectations.
The Q4 results in 2023 were under pressure, and R&D expenses increased significantly throughout the year. In the Q4 quarter, the company achieved revenue of 3.44 billion yuan (-1.57%), net profit attributable to mother of 64 million yuan (-35.73%), and net profit of 59 million yuan (+19.96%) after deducting non-attributable net profit. Profitability continued to increase. In 2023, the company's gross margin was 48.60% (+3.17pct, up 3.17 percentage points from the same period in 2022, same below), the net margin was 5.46% (+3.04pct), the sales expense ratio increased slightly to 33.45% (+0.41pct), the management expense ratio was 4.74% (-0.53pct), and the R&D expense ratio increased to 1.5% (+0.75pct).
Core traditional Chinese medicine products have grown significantly, and the main product brand strategy has paid off. By business, industrial revenue of 10.388 billion yuan (+19.4%) in 2023, of which modern traditional Chinese medicine achieved revenue of 6.604 billion yuan (+31.64%), sales of the core product Agastache Zhengqi Oral Liquid reached 2.27 billion yuan (+45%), emergency syrup achieved revenue of 881 million yuan (+67%), and Tongtian Oral Liquid achieved sales revenue of 316 million yuan (+10%); chemicals achieved revenue of 3.784 billion yuan (+2.72%). Compared with other chemicals, Hashitong achieved revenue of 163 million yuan (+2.72%). +55%). The company's OTC side digs deep into product value, increases functional expansion and promotion, accurate media matrix delivery, and multi-party collaboration; academic marketing expertise on the college side continues to improve, and strengthens evidence-based product support.
The pharmaceutical business sector has accelerated integration, and traditional Chinese medicine resources have performed well. In 2023, the company's pharmaceutical business achieved revenue of 7.726 billion yuan (-3.31%), and revenue declined slightly. In 2023, the company actively reduced costs and increased efficiency. In 2023, the company developed 48 new grade hospitals, while increasing the number of existing hospitals; on the other hand, it increased sales of traditional Chinese medicine tablets, which increased 26% year-on-year in medical terminals throughout the year. In terms of Chinese herbal medicine resources, the company achieved revenue of 1,017 billion yuan (+118.71%). Through the overall layout, it has formed a comprehensive platform from medicinal herb cultivation, processing, tablet production and smart recipes. Furthermore, Taiji Cordyceps was exported to Hong Kong for the first time, and the Chinese herbal medicine resource sector is expected to contribute significantly.
Profit forecast and investment rating: Considering the uncertainty of pharmaceutical policies and the consumption environment, we lowered the company's net profit to mother in 2024-2025 from 1,330/1,805 billion yuan to 1,104/1,446 billion yuan. The net profit for 2026 is estimated to be 1.809 billion yuan. The PE corresponding to the current market value is 17/13/10X, respectively, maintaining the “buy” rating? Risk warning: Pharmaceutical policy uncertainty risks, product competition exacerbates risks, etc.