Items:
The company announced its annual report for 2022, with an income of 1.088 billion yuan, an increase of 12.15% over the same period last year; a net profit of 116 million yuan, an increase of 15.40% over the same period last year; and a net profit of 106 million yuan, up 12.71% over the same period last year. The company's performance is basically in line with expectations.
Of this total, 2022Q4 achieved a revenue of 218 million yuan in a single quarter, down 2.73% from the same period last year; the net profit of returning to the mother was 11 million yuan, down 3.92% from the same period last year; and the net profit of deducting non-return was 4 million yuan, down 45.75% from the same period last year.
The profit distribution plan for 2022 is 1.0 yuan (including tax) for every 10 shares.
Peace viewpoint:
Under the influence of the epidemic in 2022, the performance showed resilience and profitability remained stable. 2022 the company realized income of 1.088 billion yuan (+ 12%) and net profit of 116 million yuan (+ 15%), which was basically in line with previous market expectations. As the company's core products are mainly sold in hospitals, we think they still show strong resilience under the influence of the epidemic. From the perspective of profitability, the gross profit margin in 2022 is 77.26% (- 2.00pp), which we think is mainly affected by factors such as the price increase of upstream medicinal materials; the net profit margin is 10.67% (+ 0.30pp), which is basically the same. In 2022, the sales expense rate was 48.91% (+ 0.26pp), the management expense rate was 13.04% (- 0.81pp), the R & D expense rate was 1.98% (- 0.12pp), and the financial expense rate was 1.03% (- 0.71pp), which remained basically stable.
Core products are growing steadily, and the proportion of OTC is expected to continue to increase. The company's core products are mainly gynecological medicine Kuntai capsule, Sophora flavescens gel, urinary drug Ningbitai capsule, heat-clearing and detoxification medicine Prunella vulgaris oral liquid and so on. In 2022, the income of gynaecology is 769 million yuan (+ 12%), of which Kuntai capsule is expected to earn more than 500 million yuan; the income of urinary system is 222 million yuan (+ 10%), mainly contributed by Ningbitai capsule; and the income of heat-clearing and detoxification is 80 million yuan (+ 17%). Mainly for Prunella vulgaris oral liquid. In 2022, the company began to implement the "Longmen Plan" with Yan Kuntai as the core to build the OTC brand effect. we believe that with the end of the epidemic, OTC revenue will increase significantly in 2023.
The company is one of the leaders in the research and development of innovative traditional Chinese medicine, and ushered in the rhythm of reporting production one after another in 2023. The company has three new traditional Chinese medicine products, namely, Longcen pellets, Kuerjiejieyin Gel and Shuyutong granules, and has completed phase III clinical trials, with 445 varieties of traditional Chinese medicine formula granules and 179 national standards for the record. and the research and development of classic prescription products has also achieved initial results. at present, the research and development of 8 classic prescriptions involving gynecology, pediatrics, geriatrics and other fields are under way. We believe that the company's innovative pipeline will gradually usher in the pace of reporting production from 2023.
High growth is expected to resume in 2023, maintaining the "recommended" rating. According to the company's equity incentive target, the unlocking target An in 2023 is to increase by 100% in 2023 based on revenue in 2020, or 27% in 2023 based on revenue in 2022. We believe that in the context of the liberalization of the epidemic, superimposed equity incentive targets, high growth is expected to be achieved in 2023. Considering that the performance in 2022 will be affected by the epidemic, we will lower our profit forecast for 2023-2024 to 145 million yuan or 178 million yuan (the original forecast is 187 million yuan and 239 million yuan), and increase the company's net profit forecast for 2025 to 215 million yuan. The current share price is 22 times PE in 2023, maintaining a "recommended" rating.
Risk hints: 1) Industry policy risks: policies such as health insurance control fees, drug volume procurement, health insurance negotiations and catalogue adjustment have been implemented one after another, and some drug prices are facing the risk of decline. 2) the risk of product research and development: the drug research and development cycle is long, the difficulty is high, the input cost is high, and there are risks such as not being able to go on the market smoothly, prolonging the research and development cycle, key technology and brain drain and so on. 3) repeated risk of epidemic situation in 2023: if a small peak of epidemic rebound occurs again in 2023, it may adversely affect the volume of products.