Key points of investment
Incident: The 24Q1 company achieved operating income of 1,853 billion yuan (-3.01%, same ratio, same below), net profit to mother of 119 million yuan (-9.41%), and net profit without return to mother of 113 million yuan (+9.11%); the performance was in line with our expectations.
The “Kunming Traditional Chinese Medicine 1381” brand momentum has begun to bear fruit. The three major gold products have performed brilliantly: “Kun Traditional Chinese Medicine 1381” is the company's key premium Chinese medicine platform, and 24Q1 has built a multi-dimensional brand. Among them, the key product, Shenlingjian Spleen and Stomach Granules, appeared on CCTV, Hunan TV and the annual hit drama during the Spring Festival, and continued to convey the health concept of “One pack for every meal, four seasons to strengthen the spleen and stomach”; the “Refusing to Be Anxious” series of Kun Traditional Chinese Medicine tablets launched warmly and joined hands with Beijing pharmacy chains East Health launches large-scale pop-up event “Liver Relief and Decompression Hall” to build consumers A deeper link with the brand lays the consumer foundation for the product's continued involvement in the field of emotional therapy. The top three gold products of Chinese medicine from Kunming, Shenling Spleen and Stomach Granules increased 48.42% year on year, Shu Gan Granules increased 81.72% year on year, and Xiangsha Pinggu Granules increased 26.03% year on year.
The “777” brand was officially launched, and the high-quality development of the entire 37 industry chain continued to advance: 24Q1 company officially launched the “777” brand. The 777 brand is centered on 37 products, which conforms to the trend of “population aging” and “chronic disease rejuvenation”, gradually expanding to a full range of product lines such as health management, disease prevention, serious treatment and post-illness rehabilitation, and extended 37 applications to major health fields such as oral care and beauty and skin care. “The successful launch of the 777 brand ceremony symbolizes that KPC's 777 brand has officially opened a new chapter in the Yinfa Health Strategy. We believe that the company's “strategic planning” goal is clear. The industrial CAGR is close to 20% in the next five years. At the same time, China Resources's empowerment will also drive the improvement of KPC's management efficiency, and net interest rates are expected to continue to rise in the future. The development plans for the three major business divisions continue to advance, and it is expected that performance will gradually be released in the future.
Profit forecast and investment rating: We maintain the company's net profit of 6.1/7.6/970 million yuan in 24-26 years. The current market value corresponds to PE of 26/21/17 times. We are optimistic about 39's channel empowerment of KPC Group, and we are also optimistic about KCM's rebranding as an old brand with more than 640 years of history in the new era, maintaining a “buy” rating.
Risk warning: Brand building falls short of expectations, risk of major policy changes in the industry, etc.