2023 results are in line with our expectations
The company announced its 2023 results: revenue of 39.111 billion yuan (YoY +7.19%); net profit to mother of 4,094 billion yuan (YoY +36.41%), net profit not attributable to mother of 3.764 billion yuan (YoY +16.45%), which is in line with our expectations. Among them, the pharmaceutical industry's revenue in 2023 was 13.741 billion yuan (+7.58% YoY).
Development trends
Pharmaceutical business group: White medicine aerosols have maintained good growth, and brand traditional Chinese medicine has grown brilliantly. In 2023, the main revenue of the pharmaceutical business group was 6.481 billion yuan, +8.16%. Among them, Yunnan Baiyao aerosol sales revenue exceeded 1.7 billion yuan, +15.27% year over year, Yunnan Baiyao cream revenue exceeded 900 million yuan, Yunnan Baiyao capsule sales revenue exceeded 600 million yuan, and Yunnan Baiyao Band-Aid sales revenue exceeded 300 million yuan.
Other brands of traditional Chinese medicine showed impressive growth. Revenue from Pudilan anti-inflammatory tablets and Agastache Zhengqi Water all exceeded 100 million yuan, +16% and +124%, respectively. Revenue from Gong She-ning capsules was +47% year-on-year, and revenue from Qi Xuekang oral liquid was +15% year-on-year.
Health Products Business Group: Continued development online. In 2023, the health products business group's revenue was 6.422 billion yuan, an increase of 6.50% over the previous year; in the dental care sector, according to Nielsen retail research data, as of December 23, Yunnan Baiyao toothpaste had a domestic market share of 24.60%, continuing to rank first in the market share. During the “Double 11" period in 2023, the health products business group achieved first place in several lists: Among them, the official flagship store of Yunnan Baiyao Tmall toothpaste achieved breakthrough growth, and the sales performance of a single store broke 100 million yuan for the first time; it also won new records such as No. 1 in the toothpaste hit list and No. 1 in the Douyin brand toothbrush hit list. In the field of anti-shedding and washing care, Yang Yuanqing's sales revenue exceeded 300 million yuan, +36% over the same period last year. During the “Double 11" period, Yangyuanqing ranked first in the Tmall anti-shedding category on Tmall, and cumulative Douyin sales exceeded 100 million yuan in 2023; Yangyuanqing's core single oil control and anti-loss kit topped the Douyin Mall anti-hair loss shampoo explosion list and number one in the Pinduoduo platform anti-shedding shampoo bestseller list.
The Chinese Medicine Resources Business Group was upgraded, and the business maintained a steady growth trend: In 2023, the Chinese Medicine Resources Business Group's external revenue was 1.71 billion yuan, +22% year-on-year, of which the export revenue of 37 Chinese herbal medicines was +81% year-on-year.
The Traditional Chinese Medicine Resources Business Group focuses on authentic Yunnan medicinal herbs and superior varieties of white medicine, and maintains continuous leadership in the 37 field. In terms of the natural plant extraction business, from the procurement side and production side to the sales side, the market share of eucalyptus oil has further increased; sales of capsaicin have quadrupled, becoming a new business growth point. In addition, provincial pharmaceutical companies achieved main business revenue of 24.490 billion yuan, +5.63% over the same period last year.
Actively explore and incubate emerging business divisions, and gradually clarify the long-term and short-term R&D situation. In 2023, the company restructured its emerging business segments, including the Health Products Division, the Skin Beauty Division, the Medical Devices Division, and Tianyi Tea Division. According to the company's annual report, the company has made every effort to lay out secondary innovative development of marketed varieties and rapid pharmaceutical device development in the short term to provide strong support for the company's business growth; on the one hand, it focuses on the transformation of innovative drug research and development results. On the one hand, it focuses on exclusive traditional Chinese medicine varieties and social needs to create high-demand traditional Chinese medicine products; on the other hand, it lays out multiple innovative drug developments as the center, providing impetus for the sustainable development of Yunnan Baiyao.
Profit forecasting and valuation
Considering the impact of Shanghai Pharmaceutical's investment income, EPS was reduced by 4.4% to 2.51 yuan in 2024, and EPS of 2.76 yuan was introduced in 2025. The current stock price corresponds to 2024/2025 20.4/18.6 times the price-earnings ratio. Maintaining the target price and outperforming the industry rating, the target price corresponds to 27.7 times the price-earnings ratio of 2024 and 25.2 times the price-earnings ratio of 2025, with 35.4% upside compared to the current stock price.
risks
The implementation and implementation of the strategy fell short of expectations, the price of raw materials increased, and the release of new products fell short of expectations.