Core views:
The company released its 2024 quarterly report. 2024Q1 achieved revenue of 448 million yuan (-44.36%, the following are all year-on-year values), net profit to mother of 152 million yuan (-10.74%), and net profit after deducting non-return to mother of 127 million yuan (-7.63%), which is in line with expectations.
The divestment of the non-blood products business affected apparent performance, and blood products maintained steady growth. The company continued to push forward the divestment of the non-blood products business, transferring 75% of its shares in Fuda Pharmaceutical and 89.681% of Tianan Pharmaceutical's shares in September and October 23, respectively. The decline in revenue and profit in 24Q1 was mainly due to reports from Fuda Pharmaceutical and Tianan Pharmaceutical. At the same time, due to the low gross margin of Guangdong Fuda, which operates the blood products distribution business, the 24Q1 company's financial indicators showed positive improvements. 24Q1's gross margin increased 20.41 pp to 67.79% year on year, net margin increased 12.2 pp to 33.84% year on year, and sales expenses ratio, management expenses ratio, and R&D expenses ratio increased by 3.53 pp, 2.92 pp, 3.00 pp to 23.2%, 8.46% and 4.24% year on year, respectively.
Continue to increase investment in R&D and actively expand the international market. 2024Q1's R&D investment reached 19.01 million yuan. The company has continuously increased R&D investment to form a good product pipeline. Among them, high-concentration (10%) intravenous human immunoglobulin has completed clinical trial summary reports, and is in the production approval stage. vWF factor is in phase III clinical, and C1 esterase inhibitors were approved for clinical trials in June 2023, and entered phase III clinical trials in December 2023. Furthermore, the company is actively developing the international market. In February 2024, the company announced that it has obtained drug registration approval for intravenous human immunoglobulin in Pakistan.
Profit forecasting and investment advice. We expect EPS to be 1.14 yuan/share, 1.26 yuan/share, and 1.38 yuan/share respectively in 24-26. Considering that the company's operating efficiency is among the highest in the industry, China Resources's pulp harvesting resource endowment was greatly increased. Referring to comparable company valuation levels, the company will be given 32 times PE in 2024, corresponding to a reasonable value of 36.46 yuan/share, maintaining a “buy” rating.
Risk warning. The expansion of fresh pulp stations fell short of expectations; progress in product development fell short of expectations; market competition intensified; product marketing and sales fell short of expectations; risk of asset impairment.