Incident: Baiyunshan Company released its report for the first quarter of 2024. In 2024Q1, the company achieved revenue of 22.946 billion yuan (+6.09% YoY), net profit attributable to mother of 1,958 billion yuan (+2.59% YoY), and net profit of 1,834 billion yuan (YoY +0.33%).
Comment:
Results grew steadily in 2023 and 2024Q1. According to the company's announcement, in 2023, the company achieved operating income of 75.515 billion yuan, a year-on-year increase of 6.68%, achieved net profit of 4,056 billion yuan, an increase of 2.25% over the previous year, and realized net profit without deduction of 3,636 billion yuan, an increase of 9.53% over the previous year.
Looking at the business sector, in 2023, the company's Danan Pharmaceutical's revenue was 10.891 billion yuan (+4.09% YoY), Big Health's revenue was 11.117 billion yuan (YoY +6.15%), Daehan's revenue was 52,762 billion yuan (+7.39% YoY), and Big Healthcare's revenue grew steadily at 507 million yuan (YoY +4.67%). 2024Q1's operating profit reached 2,452 billion yuan (+4.23% year over year), and financial expenses increased 43.52% year over year, mainly due to a decrease in interest income. The company will continue to deeply cultivate the market, cultivate momentum, and promote the high-quality development of various business segments.
Promote R&D and innovation of Danan Pharmaceutical and enrich the Big Health Product Matrix. According to the company's announcement, in 2023, the company's proprietary Chinese medicine business achieved revenue of 6.271 billion yuan (+11.64% year over year), accounting for 58% of Danan Pharmaceutical's revenue; the company's chemical business achieved revenue of 4.618 billion yuan (-4.67% year over year), accounting for 42% of Danan Pharmaceutical's revenue. The company invigorated online and offline marketing channels, driving the sales revenue of Jinge products to exceed 1.2 billion yuan, a year-on-year growth rate of more than 20%. At the same time, it also developed advantageous products such as Xiaochaihu to create a large volume and promote high growth rates. In addition, the company's Big Health Division focuses on diversifying products, enriching the flavors of the core brand Wang Laoji herbal tea, developing a new series of products such as sea buckthorn juice drinks, enriching the Big Health Product Matrix, and maintaining steady growth.
Consolidate the four-in-one omni-channel strategy of “Medical+Commerce+E-Commerce+Retail” through digitalization. According to the 2023 annual report, in 2023, the company continued to upgrade the digital intelligence platform construction to promote the Group's manufacturing automation and intelligent transformation. The pharmaceutical manufacturing digital workshop built by Zhongyi Pharmaceutical won the “Guangdong Intelligent Manufacturing Pilot Demonstration Project” and passed the two-integrated management system assessment, becoming one of the six proprietary Chinese medicine companies in the country that received an AA rating. In 2024, the company will focus on the development theme of the “Digital Economy Year” and actively promote the integrated development of the digital economy and the medical and health industry. Use the S2B2C platform of pharmaceutical companies to strengthen the retail business layout and actively improve the profitability level and capacity of the retail business; seize policy opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area to expand cross-border e-commerce business; accelerate the construction of the second phase of the Caizhilin Traditional Chinese Medicine Smart Frying Center project to strengthen smart pharmacy supply and service capabilities; promote intelligent drug production and digital factory construction, and raise the level of digital management.
Profit forecast: We expect Baiyunshan's 2024-2026 revenue to be 824.52/879.97/94.133 billion yuan, net profit to mother of 43.75/50.25/5.653 billion yuan respectively, and corresponding PE is 12/10/9X, respectively.
Risk factors: risk of industry policy changes, market risk, product quality control risk, drug development risk.