Core views:
The company released its 2023 annual report: the company achieved revenue of 5,042 billion yuan in 2023 (+17.3%, the following are all year-on-year ratios); net profit to mother of 1,037 billion yuan (+15.1%); net profit after deducting non-return to mother of 1,013 billion yuan (+16.1%); and net cash flow from operating activities of $1,008 billion (+17.1%).
The Q4 2023 quarter achieved revenue of 1,386 million yuan (+17.6%), net profit to mother of 151 million yuan (-4.8%), net profit after deducting non-return to mother of 127 million yuan (-0.4%), and net cash flow from operating activities of 190 million yuan (-14.1%).
The product structure is continuously optimized, and new narcotics products are released rapidly. By sector, the company's revenue in 2023 was 2.702 billion yuan (+24.3%); psychotropic products revenue was 1,092 million yuan (+3.7%); neurological products revenue was 127 million yuan (-32.2%); revenue from other preparations was 154 million yuan (+7.1%); revenue from raw materials was 146 million yuan (+24.0%); and pharmaceutical commercial revenue was 709 million yuan (+37.2%).
The company rapidly released new narcotic products such as Hydroxerichuat, and the revenue from narcotic preparations accounted for 66% of the company's pharmaceutical business revenue, and the share continued to increase.
Focus on the central nervous system market segment and continue to increase R&D to promote transformation. The company continues to increase R&D investment. In 2023, R&D investment was 614 million yuan (+23.9%); R&D expenses were 549 million yuan (+20.9%), and the R&D expenditure rate increased to 10.9%. According to the company's 2023 annual report, the company's new drug for post-operative analgesia was approved for marketing in 23. 10 projects, including dizocin, tapentadol tablets, and midazolam oral solution, are in the production review stage. In addition, the company has about 20 innovative drug projects such as NH600001, NH102 tablets, NHL35700 tablets, and YH1910-Z02, and the company's product pipeline continues to be enriched.
Profit forecasting and investment advice. We expect the company's 2024-2026 EPS to be 1.21, 1.44, and 1.71 yuan/share, respectively. Considering the rapid release of the company's narcotics products and the rapid improvement of the product structure, combined with the attributes of the narcotics industry, the company was given a 24-year 28 PE valuation, corresponding to a reasonable value of 34.01 yuan/share, and maintained a “buy” rating with reference to comparable company valuations.
Risk warning. The amount of narcotics released falls short of expectations, the risk of competition intensifying, the risk of failure in the development of new drugs, and the risk of price reduction exceeding expectations in collection.