According to the Zhixin Financial APP, Anxin International has released a research report covering Consun Pharma (01681) for the first time, giving it a "shareholding" rating. The company's revenue is expected to be RMB 2.85 billion, RMB 3.16 billion and RMB 3.54 billion respectively in 2024-2026, with net income attributable to shareholders of RMB 890 million, RMB 1.01 billion and RMB 1.14 billion respectively. The company's research pipeline is entering a harvest period, with 3 products expected to be launched this year and 5 products expected to be submitted for market registration this year. The company attaches great importance to shareholder returns, with an average annual dividend payout ratio of over 30%. In 2023, the dividend payout ratio and dividend yield were as high as 42% and 9% respectively, ranking among the top in the pharmaceutical listed companies.

Anxin International's main points are as follows:

The sales scale of core product Niaoduqing granules has steadily increased, and R-lipoic acid iron oral solution and Yishen Huashi granules have become rising stars.

As China's first evidence-based medicine research on traditional Chinese medicine for kidney disease, Niaoduqing granules have maintained the first place in the market share of oral modern Chinese patent medicine for kidney disease, with double-digit sales growth every year. R-lipoic acid iron oral solution is the only third-generation oral iron supplement that has entered the national essential drug and medical insurance catalog. It has good taste, high absorption rate, flexible dosage form, and is more in line with the recommended dose in clinical guidelines after switching to the high-specification product. It also has the advantages of DRG/DIP drug access. After the medical insurance reimbursement restrictions for children with iron deficiency anemia were lifted in the 2023 medical insurance catalog, a new impetus for market development was added. Another exclusive Chinese patent medicine, Yishen Huashi granules, is expected to become another star product after Niaoduqing granules. Since its inclusion in the medical insurance catalog in 2019, Yishen Huashi granules have maintained a fast growth momentum, with a year-on-year revenue growth of 26% in 2023. Similar to the academic promotion path of Niaoduqing granules, the company is preparing for its access to the national essential drug catalog and starting evidence-based medicine research.

The company's research pipeline is entering a harvest period, and 3 products are expected to be launched this year.

The company broadens new products through independent research and development, joint research and development, and collaborative research and development. There are 14 products in the research pipeline, including 6 innovative drugs and 8 generics. Among the generics, Iohexol injection, Iopromide injection and Rosuvastatin capsules are expected to be approved for marketing in 2024; Lanthanum carbonate, Tenegliptin, Gadoteric acid glucamine injection, Gadopentetate dimeglumine injection and Perfluoropropane lipid microsphere injection will be submitted for market registration. Among the innovative drugs, Huangqi San granules are undergoing phase II clinical data statistics, and SK-07 has entered phase Ib clinical trials.

High dividend payout and abundant cash on hand.

In the ten years since its listing, the company has paid out more than HKD 1.9 billion in accumulated dividends (excluding this year's special dividends), which is twice the amount of financing since its listing. The average annual dividend payout ratio is over 30%. In 2023, the dividend payout ratio and dividend yield were as high as 42% and 9% respectively (based on the closing price on December 31, 2023). The company attaches great importance to shareholder returns. In May 2024, the board of directors passed a resolution to continue to declare a special dividend of HKD 0.3 per share, ranking at the forefront of dividend payments in the pharmaceutical listed companies. As of 2023, the company's cash and cash equivalents (including bank large deposits) amounted to RMB 3.58 billion, and the net cash flow from operating activities was RMB 820 million, with ample cash reserves.