Incidents:
In 2023, Baiyang Pharmaceutical achieved operating income of 7.564 billion yuan, +0.72% year on year; net profit of 656 million yuan, +29.55% year on year; net profit without return to mother of 635 million yuan, +25.14%; 2023Q4 achieved operating income of 2,068 million yuan, +3.92% year on year; net profit to mother 162 million yuan, +0.26% year on year; net profit after deducted net profit of 151 million yuan, +11.52% year on year; 2024Q1 achieved operating income of 1,661 million yuan, year on year- 1.50%; net profit attributable to mother was 166 million yuan, +35.60% year over year; net profit without return to mother was 165 million yuan, +30.71% year over year.
Performance growth is in line with expectations, and core business is growing steadily
In 2023, the company's core business brand operation achieved revenue of 4.40 billion yuan, an increase of 18.91% over the previous year. If calculated after the two-ticket system business was restored, revenue of 5.420 billion yuan was achieved, of which the core brand DiQiao series achieved revenue of 1,897 billion yuan, +16.53% year over year; if calculated after restoring the two-ticket system business, it achieved operating income of 1,987 million yuan, +15.91% year over year; if calculated after restoring the two-ticket system business, achieved operating income 2024Q1 At 1,041 million yuan, the gross profit amount was 406 million yuan, accounting for 82.14% of the gross profit amount.
Business structure improvement+scale effect, continuous improvement in profitability
In 2023, the company's gross margin was 29.98%, +2.22pct year on year; net margin was 8.46%, +2pct year on year. 2024Q1 gross margin was 29.75%, +0.84pct year on year; net margin was 9.93%, +2.84pct year on year, profitability continued to improve. We believe that the main reason is the reduction in the cost ratio due to the restructuring and scale effect of the company's business. In 2023, the company's wholesale distribution business accounted for 36.68%, -9.05pct year on year. The compression of the low-margin wholesale distribution business led to an increase in profitability. Meanwhile, in 2024Q1, core products such as DiQiao and Newtschuma showed the scale effect of all terminals, reducing sales expenses by 2%.
The brand matrix has entered a period of rapid expansion. The growth points for innovative pharmaceutical devices are worth looking forward to the company currently forming a multi-brand matrix on the four major racetracks. Innovative drugs and high-end medical devices incubated by the parent company are gradually entering the commercialization stage. The company is expected to achieve continuous breakthroughs in the commercial operation of innovative drugs and high-end medical devices, driving new growth points.
Profit Forecasts and Investment Ratings
We believe that with the rapid expansion of the brand matrix, the company's performance is expected to continue to grow steadily. The revenue for 2024-2025 was raised from $8.746/9.673 billion yuan to $8.870/10.125 billion yuan, and the 2026 revenue forecast was $11.625 billion; the net profit forecast for 2024-2025 was raised from $803/1,012 million to $853/1,066 million, and the net profit forecast for 2026 was $1,294 million. Maintain a “buy” rating.
Risk warning: risk of sales falling short of expectations, risk of policy fluctuations, risk of product introduction falling short of expectations