Key investment points

The white horse of traditional medicine that drives innovation and transformation

The company is one of the leading companies integrating the pharmaceutical industry and commerce. Its business includes four major sectors: pharmaceutical industry, pharmaceutical commerce, medical aesthetics, and industrial microbiology. The company has a rich heritage, steady operation, and excellent historical market performance. The 2013-2023 revenue CAGR was 9.3%, and the net profit CAGR to mother reached 14.3%. The company's management has a global vision and efficient execution. Facing profound changes and challenges in the pharmaceutical industry, the company's transformation has been steadfastly promoted, and the innovative pharmaceutical and medical and aesthetic business has gradually become a new growth point.

The market for oncology, self-immunity, endocrinology and other drugs has broad prospects

The company focuses on the three major fields of internal oncology, autoimmunity and endocrine diseases, and has formed a matrix of three characteristic products: ADC, self-exempt topical preparations, and GLP-1. The number of patients with the above indications is huge, the product penetration rate is improving rapidly, and the market prospects are broad. According to Frost & Sullivan, China's anti-tumor drug market is expected to grow to 586.6 billion yuan in 2030, with a CAGR of 12.4% in 2023-2030. The immune medicine market is expected to grow to $19.9 billion in 2030, with a CAGR of 27.0% from 2022 to 2030. Obesity-related medical expenses in China exceeded 170 billion yuan in 2035, and the 2020-2035 CAGR was 10.6%.

The pressure on existing products has cleared up, and innovative business contributions have increased

Over the years, the company has been deeply involved in specialty, chronic diseases and special medicine, built a good brand effect and strong market base, cultivated a variety of large products with sales of several billion yuan, and provided a steady increase in cash flow for the company's long-term development. In recent years, the company has actively sought transformation, focusing on developing emerging high-margin businesses such as innovative drugs, medicine and aesthetics, and actively laying out innovative drugs and differentiated generic drugs through independent development and external introduction. At present, a number of innovative drugs and medical and aesthetic products have entered the clinical review stage. New products will be intensively approved in 2024-2025, which is expected to be rapidly released through the company's strong sales resources to provide the company with a second growth curve.

The company has entered a stage of high-quality growth, giving it a “buy” rating. We expect the company's revenue in 2024-2026 to be 43.48/47.132/50.893 billion yuan, respectively, with year-on-year growth rates of 7.0%/8.4%/8.0%, respectively. Net profit due to mother in 2024-2026 was 3.332/3.94/4.551 billion yuan, with year-on-year growth rates of 17.4%/18.3%/15.5%, and EPS of 1.90/2.25/2.59 yuan/share, respectively.

The corresponding three-year CAGR is 17.0%. The company is a leading pharmaceutical industry and commercial enterprise in China. The brand and channel advantages are obvious, and innovation and transformation have borne fruit. First coverage, giving a “buy” rating.

Risk warning: Product approval falls short of expectations, overseas market development falls short of expectations, and the market competition pattern deteriorates