Report summary:
The company is based on the pharmaceutical business, and net profit in 2023 turned a loss into a profit. The company is mainly engaged in R&D, production, sales of pharmaceuticals, health care services and commercial businesses such as medical diagnosis, gene preservation, and pregnancy environment testing. It has 10 wholly-owned and holding subsidiaries, including Hangzhou Baoling Pharmaceutical, Zhejiang Hailisheng Pharmaceutical, and Jiangsu Jiayi Pharmaceutical. The company has a modern production base, distribution center and a high-level R&D team, and is committed to building a large-scale pharmaceutical industry group for the entire pharmaceutical industry chain. In 2023, the company achieved operating income of 799 million yuan, a year-on-year decrease of 3.58%; achieved net profit of 25.1956 million yuan to reverse losses, mainly due to factors such as the company no longer accruing financial expenses on financial liabilities from July 2023, a decrease in impairment preparations for projects under construction and goodwill impairment preparations compared to the previous year, and an increase in asset disposal income compared to the previous year. In the first quarter of 2024, the company achieved operating income of 189 million yuan, an increase of 3.44% over the previous year, and achieved net profit of 18 million yuan to mother, which significantly reversed losses over the previous year, indicating that the company's related product market development results were obvious.
Product categories are rich, and R&D projects are progressing smoothly. The company's pharmaceutical product categories include anti-infectives, anti-allergic drugs, respiratory drugs, urinary system drugs, nephropathy drugs, children's medicines, cardiovascular drugs, antidepressants, pharmaceutical raw materials and intermediates. The company has a professional R&D team and a relatively complete technological innovation system. Most consistency evaluations and generic pharmaceutical research projects are independently developed by the company.
In recent years, with the revision and implementation of a series of drug registration and management measures, a series of measures such as speeding up the marketing of innovative drugs, the drug marketing license holder system, and optimizing the review and approval process have progressed rapidly. The efficiency of review and approval has greatly improved, and the pharmaceutical innovation environment has improved markedly. We believe that as the company continues to increase its R&D efforts and diversify its product range, its core competitiveness will continue to improve, and its performance is expected to gradually increase.
Set up a joint venture to lay out the AI pharmaceutical business. The company signed a “Joint Venture Agreement” with Beijing Yibao Technology. In the future, the two sides will focus on cooperation in R&D, industrialization and commercialization of innovative drugs based on AI pharmaceutical technology. The registered capital of the joint venture is estimated to be RMB 120 million. The company will invest 72 million yuan in monetary and non-monetary forms, accounting for 60% of the joint venture; Yibao Technology will invest RMB 48 million in non-monetary forms such as patents and technical secrets involved in the two pipelines selected by Qianyuan Pharmaceutical, accounting for 40% of the joint venture. The establishment of a joint venture with Yibao Technology is an important step for the company to lay out innovative drug research and development. It is conducive to integrating the superior resources of all investors, developing innovative drugs with independent intellectual property rights, promoting the company's strategic transformation from generic drugs to innovative drugs, achieving industrial upgrading, and enhancing the company's core competitiveness and sustainable development capabilities.
Investment advice: We forecast the company's revenue for 2024-2026 to be 839/88/924 million yuan, respectively, and net profit to mother of 0.59/0.74 billion yuan, corresponding EPS of 0.25/0.31/0.38 yuan, corresponding to PE32.8/26.16/21.18X, covered for the first time, giving it a “buy” rating.
Risk warning: drug price cuts, policy changes, profit forecasts and valuations fall short of expectations