Introduction to this report:
The company released its 2023 annual report and 2024 quarterly report. All sectors grew steadily throughout the year, increased marketing, and continued broadening channels to help future growth. 24Q1 performance was steady, the market was still showing a strong sales trend, and the performance is expected to maintain steady growth.
Key points of investment:
Maintain a “prudent increase” rating. The company released the 2023 annual report and the 2024 quarterly report. In 2023, it achieved revenue of 10.058 billion yuan (+15.7%), net profit to mother of 2,797 billion yuan (+13.2%), after deducting non-net profit of 2,854 billion yuan (+15.3%). Considering factors such as rising raw material prices, the 2024-25 EPS was lowered to 5.28/6.20 yuan (originally 5.48/6.32 yuan), and the 2026 forecast EPS was added to 6.93 yuan. Refer to the industry average, consider the scarcity of the company's core products, give a certain premium, give 2024 PE 45X, raise the target price to 237.6 yuan, and maintain the “cautious increase” rating.
The performance of all sectors was steady throughout 2023, with increased marketing and channel broadening to help future growth. By sector: ① Liver disease drug revenue of 4.463 billion yuan (+24.26%), sales volume is still +34.02% after the price increase, and product strength is strong; gross margin declined slightly, which is expected to recover quarterly after price increases; ② cardiovascular drug revenue of 266 million yuan (+60.6%), which is mainly expected to be released rapidly after the Yangong Niuhuang pill double product regulation is introduced to the market, but the gross margin is estimated to be 38.7% compared to 22-year -8.4 pct, which is mainly due to the continuous rise in the price of beef yolk; 100 million yuan (+ ③ 3.6%); ④ Cosmetics achieved revenue of 707 million yuan (+11.4%). Sales expenses for 23 years were 783 million yuan (+30 billion yuan). The main reason was that promotion, business promotion and advertising expenses increased to $531 million. Of these, 23Q4 confirmed sales expenses of 405 million yuan, so the apparent growth rate of profit in a single quarter was slightly disrupted. At the same time, the company has increased the channel expansion of pharmacy chains, increased publicity and promotion, and continued growth in online e-commerce, which is expected to help future growth.
The overall market is showing a strong sales trend in 2024, and the performance is expected to grow steadily. 24Q1 achieved revenue of 3.171 billion yuan (+20.6%) and net profit of 975 million yuan (+26.6%), of which: liver disease medication achieved revenue of 1.05 billion yuan (+27.8%). The overall market is still showing a strong sales trend, and full-year results are expected to maintain steady growth. In addition, the company plans to pay a cash dividend of 23.20 yuan for every 10 shares, and the dividend ratio will be greatly increased to 50.04%.
Catalysts: Rapid expansion of online channels, rapid growth in offline channel sales, and continuous growth in sales
Risk warning: Sales volume of core products falls short of expectations, risk of fluctuations in raw material prices