Revenue grew steadily, and net profit to mother reversed losses, maintaining that the “Buy” rating company achieved revenue of 8.674 billion yuan in 2023 (+0.42% year over year, all figures below); net profit to mother of 1,071 billion yuan (+505.34%); net profit after deducting non-return to mother of 1,181 million yuan (+60.11%). In terms of profitability, gross margin in 2023 was 66.8% (+2.75pct), and net sales margin was 11.72% (+15.69pct).
On the cost side, the 2023 sales expense ratio was 34.4% (+0.89pct); the management expense ratio was 3.95% (-0.33pct); the R&D expense ratio was 10.57% (+0.75pct); and the financial expense ratio was -0.22% (-0.57pct).
We are optimistic about the growth space brought about by the company's continuous innovation and research, and added the 2024-2026 net profit forecast. We expect the 2024-2026 net profit to be 11.83, 12.79, and 1,380 billion yuan, and EPS 0.79, 0.86, and 0.92 yuan/share. The current stock price corresponds to PE 19.7, 18.3, and 16.9 times, respectively, maintaining the “buy” rating.
Revenue in the fields of cardiovascular, cold and fever increased steadily. Liver disease treatment products were disrupted by collection factors. By industry, in the pharmaceutical industry, traditional Chinese medicine revenue was 5.971 billion yuan (+6.62%), chemical pharmaceutical revenue was 1.03 billion yuan (-5.3%), chemical raw materials revenue was 57 million yuan (-19.67%), and biopharmaceuticals revenue was 190 million yuan (-23.47%); in the pharmaceutical business sector, revenue was 1,215 million yuan (+0.35%).
By product, the cardiovascular and cerebrovascular treatment sector had revenue of 5.254 billion yuan (+3.45%); anti-tumor revenue of 190 million yuan (-39.67%); cold and fever revenue of 508 million yuan (+18.42%); liver disease treatment revenue of 657 million yuan (+12.96%); and other types of revenue of 812 million yuan (+3.38%). Among them, the large year-on-year decline in revenue from oncology products is mainly due to the implementation of centralized volume procurement prices for Tiqing products from an inter-provincial alliance in July 2022.
R&D innovation continues to advance. Traditional Chinese Medicine, Biopharmaceuticals, and Chemical Pharmaceuticals Collaborative Development Company is actively promoting R&D innovation. By the end of 2023, it had 98 product pipelines under development through the “four in one” model, including 41 Class 1 innovative drugs, 36 in clinical trials, 26 in clinical phase II and III, and investing 1,315 billion yuan (+29.49%) in R&D throughout 2023. This reflects that while strengthening the core competitiveness of R&D innovation, the company is gradually building a complete product echelon to provide a foundation for the company's continued positive development in the future . In addition, the company's National Key Laboratory for Modern Traditional Chinese Medicine Creation was successfully established, and the “Science Innovation China” Modern Traditional Chinese Medicine R&D and Innovation Base will continue to be empowered to help the company establish a leading position in modern traditional Chinese medicine research and development.
Risk warning: Market competition intensifies, product development progress falls short of expectations, and product sales fall short of expectations.