Incident: Recently, Daren Tang Health Technology Co., Ltd. held a business work conference to officially release and interpret the company's organizational structure optimization plan, and announced a new management team.
As the core industrial marketing organization of Daren Tang Group, Health Technology's new organizational structure is conducive to better supporting core marketing strategies. In terms of highlighting marketing leadership, the Daren Tang Group headquarters has achieved full proximity to business and empowering support; in terms of highlighting professional operations, three major divisions of healthcare, retail, and innovation have been set up to strengthen the professionalism of channel strategies and practices; in terms of highlighting the decline in channels, the business unit has further sunk from the provincial level to cities to enhance the ability to cover terminals. In terms of personnel, members of the health technology company's management team and heads of first-level departments are basically in place, and the competition for key positions such as regional managers in various divisions is expected to be completed in mid-June.
The product side focuses on the three-core and nine-wing strategy, increasing the market coverage of core products and supporting the rapid growth of industrial revenue. In '23, the company's industrial revenue was 4.930 billion yuan, maintaining double-digit growth over the previous year. Sales of over 100 million varieties reached 10, sales of quick-acting heart saving pills exceeded 2 billion yuan for the first time, and clear throat pills, Angu beef yellow pills, Jingwanhong Ointment, and anti-inflammatory pills entered the 200 million yuan category. At the same time, major varieties have also continued to increase their penetration in market terminals. Quick-acting Xinxin Pills and Beijing Wanhong Ointment have covered 500,000 pharmacies and 100,000 medical terminals, and the coverage rate of products such as clear throat drops, lung cleansing and anti-inflammatory pills, and gastrointestinal relief pills has increased significantly; Niuhuang Qingxin Pills, Angong Niuhuang Pills, and Kiyomiya Shoutao Pills have achieved effective penetration.
We have been focusing on channel penetration and regional expansion for 24 years to promote a continuous increase in sales of key products. On the basis of consolidating quality, the company will promote key cardiovascular, respiratory, digestive, and premium Chinese pharmaceutical products to achieve further success through extensive regional coverage and strong channel penetration. 1) Differentiated provincial and regional positioning to maintain steady growth in the Beijing, Tianjin and Hebei base regions; focus on accelerating the growth of Guangdong, Lu, Jiangsu, Chuan and Xiang blasting regions; accelerate the cultivation of potential regions in Zhejiang, Shanghai, Liao, E, Yun and Chongqing, and strive to achieve a market size exceeding 100 million yuan in 19 provinces and regions, covering 200 cities; 2) Adhere to “strong brand+strong academics” for the hospital market, with the guideline of “consolidating public power and sinking the county area”; The goal is to build 3 chains over 100 million; focus on increasing store yield to promote the Chronic Illness Empowerment Program.
Investment advice: Under brand leadership, the company focuses on products and markets, and continues to do a good job of improving regional coverage and channel penetration. Key categories with quick efficiency as the core are growing well. There is plenty of room for pharmaceutical resource development, cost reduction and efficiency in the future, and performance flexibility can be expected. We expect the company's net profit to be 1,214 billion yuan, 1,476 billion yuan, and 1,726 billion yuan respectively, and EPS of 1.58 yuan, 1.92 yuan, and 2.24 yuan, respectively. The current stock price corresponding to 24-26 valuations is 24, 20, and 17 times, respectively, maintaining a “buy” rating.
Risk warning: Industry policy risks, price fluctuations of Chinese herbal medicines, channel expansion falling short of expectations, sales of key products falling short of expectations, and falling short of expectations in profitability.