Institution: Citic Construction Investment (601066) Securities

Researcher: he Juying / Liu Ruofei / Yuan Quan

Core viewpoints

In 2023, the company's operating income, return net profit and net profit after deducting non-profit increased by 15% over the same period last year.Fishingknots.69%, 13Fishingknots.15% and 15.26% in 2024 Q1 Company's operating income, net profit and net profit after deduction increased by 20.58%, 26.61% and 28.23% compared with the same period last year, driven by steady growth in core categories.FishingknotsThe company's annual report and quarterly report are in line with expectations.

We are optimistic about the further optimization of the price increase dividend release and superimposed product structure of the company's core Pianzai (600436) series of products.FishingknotsTo jointly promote the company's performance to return to steady growth.

Event

The company released the 2023 annual report and the 2024 first quarterly report on the evening of April 19, the company released the 2023 annual report and the 2024 first quarterly report, the company realized operating income, return net profit and deducted net profit of 10.058 billion yuan, 2.797 billion yuan and 2.854 billion yuan respectively in 2023, up 15.69%, 13.15% and 15.26% respectively over the same period last year. In the first quarter of 2024, the company's operating income, return net profit and net profit after deduction were 3.171 billion yuan, 975 million yuan and 988 million yuan respectively, an increase of 20.58%, 26.61% and 28.23% respectively over the same period last year.

Brief comment

The growth of core products is steady and the performance growth is in line with expectations.

In 2023, the company's operating income increased by 15.69%, net profit from home increased by 13.15%, and net profit from non-return increased by 15.26%. Both ends of revenue and profit continued the steady growth trend of the previous three quarters, mainly due to the rapid growth and increased share of the pharmaceutical industry with strong profitability. Among them, Q4 achieved operating income of 2.459 billion yuan in a single quarter, an increase of 18.30% over the same period last year, and the revenue side achieved good growth driven by the core category. The net profit of returning to the home was 393 million yuan, down 6.47% from the same period last year, and deducting the non-return net profit of 413 million yuan, down 0.31% from the same period last year. The short-term pressure on the profit side is mainly affected by the rhythm of expenses.

In 2024, Q1 Company realized operating income of 3.171 billion yuan, an increase of 20.58% over the same period last year, mainly due to the continuous volume of liver disease drugs under the catalysis of price increase dividend; the net profit of returning to the mother was 975 million yuan, an increase of 26.61% over the same period last year, and 988 million yuan after deducting the net profit of non-return, an increase of 28.23% over the same period last year. The rapid growth at the profit end is mainly due to: 1) the income of the pharmaceutical industry with strong profitability is growing fast. 2) the company continues to optimize the cost structure. On the whole, Q1 company achieved better growth in the past 24 years, driven by the core category, and its performance was in line with previous forecasts.

The core variety drives industrial growth, the commercial sector maintains stable operation, the company continues to optimize and upgrade to create large items, deeply cultivate the brand, optimize the allocation of resources, and build a "440" product matrix. 2023 and 24 Q1 sub-plate point of view:

1) Pharmaceutical industry: the income in 2023 was 4.802 billion yuan, an increase of 25.94% over the same period last year, and the gross profit margin was 75.77%, a decrease of 2.93% over the same period last year, of which the income from the use of drugs for liver diseases was 4.463 billion yuan, an increase of 24.26% over the same period last year, and a gross profit margin of 78.79%, a decrease of 2.11% over the same period last year. The income of cardiovascular and cerebrovascular drugs was 266 million yuan, an increase of 60.57% over the same period last year, and the gross profit margin was 38.71%, a decrease of 8.44% over the same period last year, mainly due to the continuation of the rapid release trend of Pian Zai brand Angong Niuhuang pills. In 2024, Q1 realized an income of 1.654 billion yuan, an increase of 25.94% over the same period last year, and a gross profit margin of 70.48%, a decrease of 5.84% over the same period last year. Among them, the income from the use of drugs for liver disease was 1.505 billion yuan, an increase of 27.84% over the same period last year, and a gross profit margin of 75.75%, a decrease of 4.47% over the same period last year. The decline in profitability is mainly due to the continuous rise of bezoar and snake gallbladder, the raw materials of the pancake series. The income of cardiovascular and cerebrovascular drugs was 117 million yuan, down 3.23% from the same period last year, and the gross profit margin was 16.02%, 25.98% lower than the same period last year. Cardio-cerebrovascular categories were under short-term pressure under the influence of a high base in the same period last year, and profitability continued to be affected by fluctuations in raw material prices.

2) Cosmetics and daily chemical industry: the income in 2023 was 707 million yuan, an increase of 11.42% over the same period last year, and the gross profit margin was 62.18%, an increase of 1.58% over the same period last year. Both ends of income and profit achieved good performance, of which the sales of pearl cream in the Queen's brand tablets reached more than 100 million yuan, while sales of five of the health food products with their own "blue hats" doubled. In 2024, Q1 achieved an income of 200 million yuan, an increase of 83.18% over the same period last year, and a gross profit margin of 68.26%, an increase of 7.59% over the same period last year. The company's cosmetics and daily chemical business recovered rapidly on the basis of a low base in the same period last year. In addition, according to the requirements of the three-year action of state-owned enterprise reform, the company is actively promoting the spin-off and listing of cosmetics companies, and is carrying out audit, asset evaluation and other related work related to joint-stock reform in an orderly manner.

3) Pharmaceutical business: the revenue in 2023 was 4.205 billion yuan, an increase of 3.60% over the same period last year, the gross profit margin was 13.85%, an increase of 0.07% over the same period last year; in 2024, Q1 realized an income of 1.254 billion yuan, an increase of 12.86% over the same period last year, and a gross profit margin of 14.65%, a decrease of 2.73% over the same period last year. The commercial sector continued to recover from a low base in the same period last year.

Looking forward to 24 years: make excellent tablets, expand a series of products, strengthen cosmetics, promote the company's performance to restore steady growth, and look forward to 24 years, as the company continues to make excellent films, expand a series of products, and strengthen cosmetics, strive to achieve sales of more than 500 million drugs and 3 hundred million varieties of drugs, and the product structure is expected to be further optimized. On this basis, the company actively carries out channel carding, strengthens the complementary channels of Pian Zi Kuiguo Pharmacy and terminal chain, and promotes the continuous expansion of multiple channels such as experience hall, regional distribution, retail drugstores and online flagship stores, while strengthening the construction of key regions. Brand influence and product coverage are expected to be further improved. We are optimistic about the release of the price increase dividend and the further optimization of the superimposed product structure of the core products of the company, so as to jointly promote the steady growth of the company's performance.

Continue to optimize the cost structure, and other financial indicators are basically normal.

For the whole of 2023, the company's comprehensive gross profit margin was 46.76%, an increase of 1.12% over the same period last year, and its profitability increased steadily; the rate of sales expenses was 7.78%, an increase of 2.22% over the same period last year, mainly due to the increase in promotion, business publicity and advertising expenses of the current period; the rate of management expenses was 3.65%, a decrease of 0.16% over the same period last year. The rate of R & D expenditure was 2.31%, a decrease of 0.34% over the same period last year, which remained basically stable. The net cash flow generated by operating activities decreased by 67.89% compared with the same period last year, mainly due to the company's careful analysis of future capital use plans and adjustment of the management mode of time deposits in the light of the actual business situation. Other financial indicators are basically normal.

2024 年Q1，公司综合毛利率为47.26%，同比减少1.04 个百分点，推测主要受到原材料成本上涨的影响；销售费用率为5.20%，同比减少0.30 个百分点，基本保持稳定；管理费用率为2.42%，同比减少1.38 个百分点，控费效果理想；研发费用率为2.80%，同比增加0.73 个百分点，主要由于公司加大新药研发投入力度所致。经营活动产生的现金流量净额同比下降16.23%，基本保持稳定。其余财务指标基本正常。

盈利预测及投资评级

我们看好公司多渠道扩展推动核心产品逐步实现高质量增长，提价红利持续释放，预计公司2024