Lushang Freda Pharmaceutical (SH:600223) Wanlian Securities·2024-06-21 03:00Investment Rating - The report assigns an "Accumulate" rating for the company, with a target price of 1,016.57 [4]. Core Insights - The company has transitioned from a real estate focus to a health-centric model, emphasizing cosmetics, pharmaceuticals, and raw materials. In 2023, the revenue breakdown was 52.76% from cosmetics, 11.35% from pharmaceuticals, and 7.67% from raw materials and additives [2][65]. - The pharmaceutical segment is diversifying with a multi-channel approach, although it experienced a revenue decline of 23.25% year-on-year in Q1 2024 due to high base effects and business adjustments. Future growth is anticipated as online product chains are established [3][8]. - The cosmetics business is undergoing a strategic upgrade to a "5+N" model, focusing on both beauty and medical aesthetics, with significant revenue growth from key brands like Yilian and Aierboshi [22][75]. Summary by Sections Company Overview - The company, originally a state-owned real estate firm, has divested its real estate operations to focus on the health industry, particularly after acquiring Shandong Furuida Pharmaceutical Group in 2018. The transition was completed in 2023, leading to a rebranding as Lushang Furuida Pharmaceutical Co., Ltd. [16][68]. Cosmetics Business - The cosmetics segment has seen a compound annual growth rate (CAGR) of 61.35% from 2018 to 2023, with 2023 revenues reaching 2.416 billion yuan, a 22.71% increase year-on-year. The gross margin has remained stable around 60% [56][75]. - The company has launched a medical beauty brand, "KeyC," targeting the collagen medical beauty market, which is expected to create a new growth curve [22][75]. Raw Materials Business - The raw materials segment has shown steady growth, with a CAGR of 40.99% from 2018 to 2023. The company is focusing on increasing the sales proportion of high-margin cosmetic-grade hyaluronic acid and expanding into overseas markets [22][75]. Pharmaceutical Business - The pharmaceutical division includes well-known brands and is adopting a full-channel model. Despite a revenue drop in Q1 2024, the business is expected to recover as adjustments are completed and online channels are enhanced [3][8]. Financial Forecast - The company forecasts earnings per share (EPS) of 0.34, 0.42, and 0.52 yuan for 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (PE) ratios of 22, 18, and 15 times based on the stock price as of June 17, 2024 [8].