Brand operation leader, innovation drives future growth

The company was founded in 2005 and listed on the Shenzhen Stock Exchange in 2021. As a pharmaceutical industrialization platform that supports innovation at the source, its core business focuses on product development, manufacturing and commercial operation of medical innovation achievements. It has now incubated several leading brands in the treatment fields of bone health, liver disease, metabolic diseases, etc., such as DiQiao, Fuzhenghua, Nida, and Protech, etc., and has formed a rich product matrix covering OTC, DaHealth, OTX and other prescription drugs, critical medicines such as oncology, and high-end medical devices. We are optimistic about the company's core CSO business, based on existing stock customers, the growth potential brought by the “new cooperation with existing customers plus extended BD expansion cooperation+group incubation product injection”, and the potential growth space brought by expanding the upstream pharmaceutical business. The net profit for 2024-2026 is expected to be 0.805/1/1.204 billion yuan, and EPS is 1.53/1.90/2.29 yuan/share. The current stock price corresponds to PE 15.4/12.4/10.3 times, covered for the first time Give it a “buy” rating.

Choose quality products to strengthen the brand, and the product matrix with great potential continues to be rich

The brand operation business is the company's core revenue and profit source. In terms of OTC and health, the company has dug deep into product advantages and accurately positioned consumer demand. After years of operation, it has successfully incubated flagship products such as DiQiao, Hailu, Neutschuma, etc., and its brand operation capabilities have been verified, and a series of effective skincare products have been laid out to develop new opportunities in our market; in terms of OTX prescription drugs, the company continues to expand new customers while cooperating deeply with existing customers.

The Group incubates and injects innovative pharmaceutical products, and acquires Baiyang Pharmaceutical Pharmaceutical Industrial Company not only as an open commercialization platform to upstream customers and cooperates with outstanding external pharmaceutical companies, but also invests in early Biotech projects through equity cooperation between parent company Baiyang Group and national research institutes, forwardly enters cutting-edge domestic First in Class innovative pharmaceutical device development and locks in commercial interests. After the cooperative products are approved for marketing, it will be operated by Baiyang Pharmaceutical's commercialization platform. This model helps to operate from “investment - development - production -- In the “sales” integration process, we have gradually established our own innovation incubation platform to promote growth through innovation. Furthermore, the company's acquisition of Baiyang Pharmaceutical will help explore the “pharmaceutical industry production+CSO” integrated development mechanism and open up the ceiling for long-term development.

Risk warning: Market competition intensifies, product sales fall short of expectations, and Baiyang Pharmaceutical's performance falls short of expectations.