Incidents:
Sunflower Pharmaceutical issued an announcement on April 26, 2024: In 2023, the company achieved operating income of 5.70 billion yuan, an increase of 11.89%; net profit to mother was 1,119 billion yuan, an increase of 29.05%; net profit after deducting non-return to mother was 1.03 billion yuan, an increase of 24.77% year on year. In the first quarter of 2024, the company achieved operating income of 1,518 billion yuan, a year-on-year decrease of 14.01%; net profit to mother of 255 million yuan, a year-on-year decrease of 37.17%; net profit after deducting non-return to mother was 237 million yuan, a year-on-year decrease of 39.18%.
Investment highlights:
The company maintained a steady growth trend. Revenue and profit for the first quarter were briefly pressured. In 2023, the company achieved operating income of 5.70 billion yuan, up 11.89% year on year; net profit to mother was 1,119 billion yuan, up 29.05% year on year; net profit after deducting non-return to mother was 1.03 billion yuan, up 24.77% year on year. In the first quarter of 2024, the company achieved operating income of 1,518 billion yuan, a year-on-year decrease of 14.01%; net profit to mother of 255 million yuan, a year-on-year decrease of 37.17%; net profit after deducting non-return to mother was 237 million yuan, a year-on-year decrease of 39.18%.
Rich in variety resources, building a large-scale gold single product group matrix, the company has 1126 drug approval numbers, including 555 in the national medical insurance catalogue, 283 in the national essential drug catalogue, 27 exclusive varieties (4 exclusive medical insurance varieties), rich variety reserves, and continues to strengthen the product pipeline under the overall policy of “purchase, reform, joint research and generation” R&D to meet the company's overall future development needs. Focusing on the two core brands “Sunflower” and “Little Sunflower”, we are determined to build large gold products and continue to expand the gold single product cluster. In 2023, the annual delivery amount of liver protection tablets broke the 1 billion yuan mark for the first time in history, ranking first in the industry.
Actively pay dividends to shareholders, and establish a solid management layout in 2023. The company's dividend amount is 876 million yuan (tax included), with a dividend rate of 78.27%, corresponding to a dividend rate of 5.77%.
2024 is the first year of the company's “6th Five-Year Plan”. The company will track and implement the four major engine acceleration, four major innovation support, and the implementation of the four major guarantees, and strive to break the 10 billion mark by the end of the 65 phase.
Profit forecast and investment rating We expect to achieve operating income of 6.370 billion yuan, 7.229 billion yuan and 8.222 billion yuan respectively in 2024-2026, and realized net profit of 1,186 billion yuan, 1,318 billion yuan, and 1,482 billion yuan respectively. The corresponding PE valuations are 12.77X, 11.48X, and 10.21X, respectively. In view of having a rich product pipeline, we continue to promote the company's product sales volume, actively promote the “6th Five-Year Plan”, cover it for the first time, and give it a “buy” rating.
Risks indicate the risk of changes in industry policies; the volume of core products falling short of expectations; the risk of declining brand influence; the risk of price fluctuations due to tight supply of raw materials; progress in product development falling short of expectations; and the loss of part of the market due to increased market competition.