In 2023, revenue increased 9.23%, and net profit to mother increased 9.26%. In 2023, the company's revenue was 49.696 billion yuan, up 9.23% year on year; net profit to mother was 2.146 billion yuan, up 9.26% year on year, after deducting non-net profit of 2,093 billion yuan, up 9.52% year on year. In 2023, Q4 achieved revenue of 13.166 billion yuan, a year-on-year increase of 20.17%, net profit to mother of 684 million yuan, an increase of 28.41% year-on-year, after deducting non-net profit of 662 million yuan, an increase of 35.46% year-on-year.
The direct sales business in Beijing has been growing steadily, and the market position continues to lead. In 2023, the company's direct sales model revenue was 32.529 billion yuan, an increase of 10.93% over the previous year. In 2023, the company will promote the development of regional direct sales business from multiple angles and maintain its leading position in the Beijing market. The company continues to follow up the implementation of volume-procured varieties, nationally negotiated varieties, and newly marketed varieties, accelerate the transformation from simple drug sales to providing pharmaceutical solutions, and continuously improve the speed and quality of development through fine management. The company has achieved 100% coverage of regional hospitals in Beijing and covered more than 4,700 primary care institutions. Among them, the company's sales in secondary and tertiary hospitals rank first in the region, and has strong medical terminal coverage and service capabilities in Beijing.
The national distribution business continues to grow, and the quality of operations in the industrial sector has improved. In 2023, the company's distribution model revenue was 18.534 billion yuan, up 9.15% year on year; industrial model revenue was 1,077 billion yuan, down 20.60% year on year. The company continues to strengthen communication with suppliers, meet the diverse business needs of suppliers, provide quality services, and try its best to stabilize channels under the adverse effects of the upstream channel flattening policy, while carrying out marketing transformation to enable distribution. The company's industrial sector continues to strengthen R&D and investment in new drugs, promote the launch and marketing of new products, and at the same time use the Group's resources to improve market sales. By seeking efficiency from management, strengthening fine control, and reducing production costs, gross margin increased by 9.93 pct year-on-year, and net profit grew rapidly.
The leading position in the distribution of narcotic drugs is stable, and the profit contribution of joint ventures is steady. The company continues to improve the level of professional academic service for narcotics customers, enhance its narcotics supply chain management capabilities, expand market development space, and consolidate its channel advantage and leading position in the field of narcotics specialty drugs. The company's hemp drug business has covered 31 provincial and government regions, reaching more than 50,000 hemp medicine customers across the country. Meanwhile, among the company's participating companies related to narcotics in 2023, Yichang Renfu achieved net profit of 2,429 billion yuan, an increase of 16.88% over the previous year, and Qinghai Pharmaceutical achieved net profit of 9.2241 million yuan, contributing a total of 479 million yuan to the joint venture's investment income.
Profit forecasting and investment advice. We expect the company's EPS for 2024-2026 to be 3.17, 3.54, and 3.95 billion yuan, respectively. Referring to comparable company estimates, the company is a leading distribution company in Beijing and the national anesthetic drug distribution company, which gives a certain premium. We will give the company 12-15 times PE in 2024, corresponding to a reasonable value range of 38.08-47.60 yuan, and give it a “superior to the market” rating.
Risk warning: policy risks such as the collection of narcotic drugs; risk of market competition; risk of drug distribution revenue falling short of expectations, etc.