Investment Rating - The report assigns a "Buy" rating to Yunnan Baiyao, with a target valuation of NA [3] Core Views - Yunnan Baiyao is a leading traditional Chinese medicine (TCM) company transitioning into a modern health and wellness enterprise, with a history of over 120 years [2] - The company operates through four major business segments: pharmaceuticals, health products, TCM resources, and Yunnan Pharmaceutical Company, ensuring steady growth [3] - Yunnan Baiyao's profitability is improving, with a focus on shareholder returns, maintaining a high dividend payout ratio of over 90% in recent years [3] - The company is driving growth through both internal R&D and external investments, exploring new growth opportunities in areas like nuclear medicine and innovative fields [3] - The report forecasts net profit attributable to shareholders of 4.51/5.02/5.47 billion yuan for 2024-2026, with year-on-year growth of 10.1%/11.3%/9.0%, and a PE ratio of 21/19/17 times [3] Business Segments Pharmaceutical Segment - The pharmaceutical segment, including the exclusive Baiyao series and over-the-counter drugs, is a core driver of growth, with a 5-year CAGR of 7.4% and revenue of 6.48 billion yuan in 2023 [17] - Key products like Yunnan Baiyao aerosol, plaster, and capsules have achieved significant sales growth, with the aerosol generating over 1.7 billion yuan in revenue [17][19] Health Products Segment - The health products segment, particularly Yunnan Baiyao toothpaste, has a leading market share of 24.6% in 2023, with a 5-year CAGR of 7.5% and revenue of 6.42 billion yuan [17][23] - The segment is expanding into scalp care and skincare, with the Yang Yuan Qing brand focusing on oil control and anti-hair loss [24] TCM Resources Segment - The TCM resources segment focuses on leveraging Yunnan's rich herbal resources, with external sales of 1.71 billion yuan in 2023, a 22% year-on-year increase [24] - The segment is developing products like Panax notoginseng and Paris polyphylla, as well as natural plant extracts [24] Yunnan Pharmaceutical Company - Yunnan Pharmaceutical Company is the largest pharmaceutical distribution company in Yunnan, with a 21.7% market share and revenue of 24.49 billion yuan in 2023, growing at a 5-year CAGR of 8.4% [25] Financial Performance - Yunnan Baiyao's revenue is expected to grow from 36.49 billion yuan in 2022 to 48.00 billion yuan in 2026, with a CAGR of 7.1% [3] - Net profit attributable to shareholders is projected to increase from 3.00 billion yuan in 2022 to 5.47 billion yuan in 2026, with a CAGR of 10.1% [3] - The company's ROE has been improving, reaching 10.4% in 2023, and is expected to rise to 13.0% by 2026 [35] Strategic Initiatives - Yunnan Baiyao is focusing on both internal R&D and external investments to drive growth, with significant investments in areas like nuclear medicine and innovative fields [3][27] - The company has established a global presence with operations in Beijing, Shanghai, Hainan, Hong Kong, and South Korea, and has invested in companies like Shanghai Pharma and Wanlong Holdings [27][28] - Yunnan Baiyao is also exploring new business areas, including health supplements, skincare, medical devices, and tea products, to diversify its revenue streams [26]

Investment Rating - The investment rating for Yunnan Baiyao is maintained as "Buy" [2][3] Core Views - The company is experiencing a recovery in performance with strong brand power and a solid product base serving as its competitive advantages. Yunnan Baiyao holds the leading market share in products like toothpaste and wound plasters, with a revenue of 6.481 billion yuan from its pharmaceutical segment in 2023, reflecting an 8.16% year-on-year growth [2] - The introduction of new business lines and management's commitment to performance improvement are expected to drive stable net profit growth in the long term. The company has repurchased approximately 12.6 million shares to implement employee stock ownership plans, enhancing employee motivation [2] - The company has maintained a high dividend payout ratio, exceeding 90% for two consecutive years, with a proposed dividend of 20.77 yuan per 10 shares in 2023, totaling 3.706 billion yuan [2] Financial Summary - Revenue projections for Yunnan Baiyao are as follows: 39.111 billion yuan in 2023, 41.320 billion yuan in 2024, 44.091 billion yuan in 2025, and 47.035 billion yuan in 2026, with respective growth rates of 6.71%, 7.19%, 5.65%, and 6.68% [1] - The net profit attributable to the parent company is projected to be 4.094 billion yuan in 2023, 4.584 billion yuan in 2024, 5.677 billion yuan in 2025, and 5.135 billion yuan in 2026, with growth rates of 36.41%, 11.96%, 12.02%, and 10.56% respectively [1] - Earnings per share (EPS) are expected to increase from 2.29 yuan in 2023 to 3.18 yuan in 2026, with corresponding P/E ratios decreasing from 22.02 in 2023 to 15.88 in 2026 [1][2]

Group 1: Investor Relations Activity - The meeting was categorized as a specific audience survey [1] - The event included a site visit [1] - Participants included representatives from交银施罗德 and国信证券 [1] Group 2: Meeting Details - The meeting took place on July 23, 2024 [1] - Location was the Group's headquarters office building [1] - Attendees from the company included board secretary and investor relations management [1] Group 3: Main Content of the Meeting - The primary focus was to understand the company's production and operational status [1]

Dividend Policy - Yunnan Baiyao emphasizes sustainable and reasonable returns to investors, with a 2023 dividend plan of CNY 20.77 per 10 shares, totaling CNY 3.706 billion, which accounts for 90.53% of the 2023 net profit attributable to shareholders [2] - The company has consistently paid dividends for 31 years since its listing in 1993, with cumulative cash dividends exceeding CNY 24.4 billion [2] Pharmaceutical Business Performance - In 2023, the pharmaceutical segment generated revenue of CNY 6.481 billion, marking an 8.16% year-on-year increase [3] - Key products showed strong growth, with Yunnan Baiyao aerosol sales exceeding CNY 1.7 billion, up 15.27% [3] - Other significant products include Yunnan Baiyao ointment (over CNY 900 million), Yunnan Baiyao capsules (over CNY 600 million), and several traditional Chinese medicine products achieving over CNY 100 million in sales [4] Oral Care Market - Yunnan Baiyao toothpaste held a 24.60% market share in 2023, maintaining the top position [5] - During the "Double 11" shopping festival, the official flagship store for Yunnan Baiyao toothpaste achieved over CNY 100 million in sales, becoming the first flagship store to do so with a single product [5] - The company employed a dual-channel strategy to enhance brand visibility, conducting over 14,700 promotional events across 1,465 cities [5] Research and Development Strategy - The company leverages its Central Research Institute to coordinate R&D across four centers, focusing on traditional Chinese medicine and innovative drug development [6] - Key R&D centers include Kunming (traditional medicine), Beijing (academic collaboration), Shanghai (innovative drugs), and Wuxi (medical devices) [6] Future Outlook - Yunnan Baiyao aims to position itself as a comprehensive health solution provider, focusing on pharmaceuticals, health, and medical distribution [7] - The company plans to strengthen its core competencies in traditional Chinese medicine and expand its market leadership while exploring new business growth opportunities [8] - A strategic investment capability and risk management system will be developed to support healthy and efficient growth in core and innovative businesses [8]

Financial Performance - In Q1 2024, the company achieved revenue of CNY 10.774 billion, a year-on-year increase of 2.49% [2] - The net profit attributable to shareholders was CNY 1.702 billion, up 12.12% year-on-year [2] - For the full year 2023, total revenue reached CNY 39.111 billion, an increase of 7.19% from CNY 36.488 billion in 2022 [2] - The net profit attributable to shareholders for 2023 was CNY 4.094 billion, a significant rise of 36.41% [2] - The basic earnings per share for 2023 was CNY 2.29, with a return on equity of 10.51% [2] Product Sales Performance - The sales revenue of the Yangyuanqing anti-hair loss products exceeded CNY 300 million in 2023, marking a 36% year-on-year growth [3] - During the "Double 11" shopping festival, Yangyuanqing ranked first in the Tmall national anti-hair loss category and achieved over CNY 100 million in sales on Douyin [3] Oral Care Market - In 2023, Yunnan Baiyao toothpaste held a 24.60% market share in the domestic market, maintaining the leading position [4] - The flagship store on Tmall achieved over CNY 100 million in sales, becoming the first toothpaste single product to reach this milestone [4] - The company conducted over 14,700 offline promotional activities, covering 1,465 cities [4] Dividend Policy - In 2023, Yunnan Baiyao's dividend plan was CNY 20.77 per 10 shares, totaling CNY 3.706 billion, which accounted for 90.53% of the net profit attributable to shareholders [5] - The company has consistently paid dividends for 31 years since its listing, with cumulative cash dividends exceeding CNY 24.4 billion [5]

Group 1: Investor Relations Activity - The meeting was categorized as a specific object survey [1] - Participants included investors from Huafu Securities Yunnan Branch [1] - The event took place on July 3, 2024, at the company's headquarters [1] Group 2: Company Overview - The main focus of the meeting was to understand the company's production and operational status [1] - The meeting was attended by representatives from the company, including securities affairs representative Li Mengjue and investor relations manager Yang Kexin [1]

Financial Performance - In Q1 2024, the company achieved a revenue of CNY 10.774 billion, a year-on-year increase of 2.49% [2] - The net profit attributable to shareholders was CNY 1.702 billion, up 12.12% year-on-year [2] - For the full year 2023, total revenue reached CNY 39.111 billion, an increase of 7.19% from CNY 36.488 billion in 2022 [2] - The net profit attributable to shareholders for 2023 was CNY 4.094 billion, a significant rise of 36.41% compared to CNY 3.001 billion in 2022 [2] - Basic earnings per share for 2023 were CNY 2.29, with a return on equity of 10.51%, up 2.64 percentage points year-on-year [2] Core Product Sales - The sales revenue of the Yunnan Baiyao aerosol exceeded CNY 1.7 billion, growing by 15.27% [3] - Other core products, including Yunnan Baiyao adhesive bandages and ointments, also reported sales over CNY 1 billion, with ointments exceeding CNY 900 million and capsules over CNY 600 million [3] - The company is focusing on enhancing its core competitiveness through collaborations with academic institutions and targeted marketing strategies [3] Online Marketing Strategies - In 2023, the health product division leveraged major online shopping events like "618" and "Double 11" to boost sales through partnerships with platforms like Tmall, JD.com, and Pinduoduo [4] - Creative live streaming on platforms such as Douyin was employed to expand online market share [4] - Brand exposure was enhanced through collaborations with popular IPs and content marketing initiatives [4] Future Outlook - The company aims to position itself as a comprehensive solution provider in the health sector, focusing on pharmaceuticals, health products, and medical distribution [5] - Plans include strengthening the core position of traditional Chinese medicine and expanding its market leadership [5] - The company will adopt a cautious approach to new business development while ensuring the healthy growth of core and innovative businesses [5]

Group 1: Investor Relations Activity - The meeting was categorized as a "telephone conference" [1] - Participants included representatives from Jianxin Fund and Guolian Securities [1] - The meeting took place on July 1, 2024, at the company's headquarters [1] Group 2: Company Overview - The main focus was to understand the company's production and operational status [1] - The meeting was attended by the board secretary and investor relations representatives [1]

Group 1: Investor Relations Activity - The meeting was categorized as a telephone survey [1] - Participants included representatives from招商基金 and 国联证券 [1] - The meeting took place on July 1, 2024, at the company headquarters [1] Group 2: Purpose of the Meeting - The main focus was to understand the company's production and operational status [1] - The meeting aimed to address relevant questions from investors [1] Group 3: Attendees - Company representatives included 李孟珏 (Securities Affairs Representative) and 杨可欣, 张昱 (Investor Relations Management) [1] - A total of 10 participants from various investment firms attended the meeting [1]

Sales Performance and Marketing Strategies - In 2023, Yunnan Baiyao toothpaste held a domestic market share of 24.60%, maintaining the top position in the market [2] - During the "Double 11" shopping festival, the health product division achieved multiple first-place rankings, with the Yunnan Baiyao Tmall flagship store surpassing 100 million in sales for the first time [2] - Over 1.47 million offline promotional activities were conducted, covering 1,465 cities [2] Financial Performance - The health product division reported a revenue of 6.422 billion yuan in 2023, reflecting a year-on-year growth of 6.50% [3] - The provincial pharmaceutical company achieved a revenue of 24.49 billion yuan in 2023, with a year-on-year increase of 5.63% [4] Operational Efficiency - The provincial pharmaceutical company improved its overall operational efficiency, with a 7.4% increase in order fulfillment rate and a 22% enhancement in order response speed [4] - The company implemented a refined service system, offering delivery options such as same-day and next-day delivery [4] Research and Development Plans - The company focuses on short-term, mid-term, and long-term R&D projects, emphasizing market-driven innovation and evidence-based medicine [5] - Short-term goals include secondary innovation of existing products and rapid development of drug-device combinations [5] - Long-term strategies involve the development of innovative drugs, particularly in traditional Chinese medicine and nuclear medicine [5]