Event: Total operating income of 1.63 billion yuan (+36.10%); net profit to mother of 290 million yuan (+45.42%); net profit after deducting non-return to mother of 250 million yuan (+26.21%) was achieved in 2023. In 2024, the company achieved operating income of 420 million yuan (+20.93%), net profit to mother of 60 million yuan (+2.03%), and net profit of 60 million yuan (+4.95%) after deducting non-return to mother in a single quarter. The 2023 dividend plan is to pay a cash dividend of $2.00 (tax included) for every 10 shares.
The volume of main products is growing, and channel barriers are continuously being built. Based on the first quarter and fourth quarter of 2023, there was a sharp increase in the number of cases of throat diseases and influenza in China. The market demand for the company's core products, Throat Sword Spray and Throat Sword Spray (children's type), was strong, and sales increased dramatically. The company's respiratory medication revenue in 2023 was 1.3 billion yuan, an increase of 19.5% over the previous year. By the end of 2023, the company's product Throat Sword Spray (children's type) had covered 334 cities and 2355 counties, covering a total of more than 175,000 terminals, including more than 5,500 first-level hospitals, more than 13,000 primary care terminals, more than 34,000 clinics, and more than 123,000 retail terminals such as pharmacies. Throat Sword Spray (adult type) has covered 242 cities and 1,539 counties, covering a total of more than 8,4,600 terminals of various types, including more than 3,300 grade hospitals, 8,400 primary care terminals, more than 35,000 clinics, and more than 62,000 retail terminals such as pharmacies, etc., covering more than 67% of domestic specialist hospitals.
Costs are generally manageable, and gross margins have increased. In 2023, the company achieved a gross profit margin of 73.71% (+1.57pp), with a gross profit margin of 73.52% (+1.84pp) for respiratory drugs, 87.23% for blood use, 81.51% (-1.02pp) for gynaecological drugs, 48.86% (-2.22pp), gross profit margin for cardiovascular drugs 69.03% (+0.87pp). The increase in the company's gross margin is mainly due to the increase in the gross margin level of the company's high-margin product, Kaiser Spray, which accounts for the increase in gross margin level. The company's sales expenses/management expenses/financial expenses/R&D expenses in 2023 were +1.68/+0.68/+0.05/+0.38pp, respectively.
Chinese medicine is also listed, and the products are constantly being expanded. Dechangxiang, which the company held in 2022, Invincible Pharmaceutical, which was indirectly controlled by the company in 2023, and Hanfang Pharmaceutical, which was included in the scope of the company's merger in the fourth quarter, all achieved profits, all had a positive impact on the company's revenue and profits. In 2023, Dechangxiang achieved revenue of 130 million yuan and profit of 15 million yuan, while Hanfang Pharmaceutical achieved revenue of 572 million yuan and profit of 63 million yuan. In addition to this, it has also improved the layout of the company's traditional Chinese medicine manufacturing industry chain to expand its product line. The company will form a multi-department hematology product line based on the Sanli Fist product Pharyngology Spray (children's type) and Throat Sword Spray, and expand the key products of Chinese medicine such as astragalus gel whitening capsules, astragalus granules, children's rejuvenation granules, gynecological reconstruction capsules, etc., to create a multi-department hematologic product matrix covering respiratory systems, gynaecologic supplements Category and other department products.
Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 370 million yuan, 470 million yuan, and 590 million yuan, corresponding PE is 18, 14, and 11 times, respectively. It is recommended to keep an eye on it.
Risk warning: Expense control or failure to meet expectations, sales of core products falling short of expectations, risk of rising costs, risk of impairment of goodwill.