occurrences
Da Ren Tang released its report for the third quarter of 2023. In the first three quarters, the company achieved operating income of 5.793 billion yuan, +4.13% year-on-year; net profit of 858 million yuan, +17.73% of the previous year; net profit after deduction of 842 million yuan, +29.80% year-on-year. Net operating cash flow was $81 million, or -35.81% year-on-year.
Incident reviews
Operations remained stable in the first three quarters, and core product revenue showed double-digit growth. Revenue for the first three quarters of 2023 increased 4.13% year on year. According to the company's current sector division, industrial revenue increased by 12.9% year on year; commercial revenue decreased 4% year on year. The company's key varieties of quick-acting heart-saving pills, phroat cleansing pills, Angong Niuhuang pills, and Jingwanhong Ointment all achieved double-digit year-on-year growth in sales revenue and sales volume. Revenue from core products remained stable.
There was a slight correction in 23Q3 revenue. Profit fluctuations were affected by investment income. 23Q3 company revenue was 1,755 million yuan, -4.67%; net profit was 136 million yuan, -47.84%; net profit after deducting non-return net profit of 130 million yuan, -29.07% year-on-year. The decline in profit was mainly due to a year-on-year decrease in sales revenue and investment income of associated companies. Q3 Short-term performance is under pressure, and I am optimistic about the company's long-term development.
Fully promote the “three cores and nine wings” and the new “1+5” layout, the “China Heart” plan continues, the “China Heart” plan is launched, and the 14th Five-Year Plan development goals are clear
Da Rentang has comprehensively laid out the “three cores and nine wings” short and medium- to long-term strategic plan and the “1+5” medium- to long-term strategic layout. The company plans to continue to advance in 2023 and strive for new breakthroughs in the marketing sector. The company's market development work revolves around the “three cores”. On the basis of continuing the “Heart of China” plan, the “China Heart” program was launched. The company is building a “nine wing” collaborative product layout optimization on the basis of “three cores”.
The “1+5” strategic layout focuses on the main brand of “Ta Ren Tang” and carefully lays out traditional Chinese medicine related industries.
According to the 14th Five-Year Plan, the company's core cardiovascular products, quick-acting heart saving pills, will strive to exceed 2 billion yuan on the basis of 1.3 billion yuan in 2021; the “China Heart and Health Tour” campaign promotes heart care pills and the main respiratory system products, throat cleansing drops, reaching a scale of 5-10 billion yuan; gastrointestinal safety pills, cleansing tablets, and paralysis capsules reach a scale of 3-5 billion yuan.
Investment advice: Maintaining a “buy” rating
Ta Ren Tang has a history of 100 years. The company owns the famous product “quick-acting heart saving pills” and has established a cardiovascular and cerebrovascular product line. With the advancement of the company's strategic layout, future performance has potential for development.
We adjusted the company's profit forecast. The company's revenue for 2023-2025 was 85.7/94.5/10.55 billion yuan (previous value was 91.8/103.7/11.76 billion yuan), up 4%/10%/12% year on year, respectively, and net profit was 9.9/11.8/1.44 billion yuan (previous value was 10.8/13.3/1.63 billion yuan), up 14%/20%/22% year on year, respectively, and the corresponding valuation was 28X/23X/19X. Therefore, we maintain a “buy” investment rating.
Risk warning
Policy risks, risk of rising costs, R&D risks, etc.