Fangsheng Pharmaceutical(SH:603998) Hua Yuan Zheng Quan·2024-06-27 06:00Investment Rating - The report initiates coverage with a "Buy" rating for the company [4][13][22]. Core Views - The company is a leading innovative traditional Chinese medicine enterprise, focusing on the "338 Product Creation Plan" to drive steady growth [4][6][22]. - The company aims to develop three products with over 1 billion RMB in sales, three products with over 500 million RMB, and eight products exceeding 100 million RMB in sales over the next 5-10 years [6][40]. - The company has a rich pipeline of innovative traditional Chinese medicine products, which are expected to become new profit growth points [23][36]. Summary by Sections 1. Company Overview - The company has implemented strategic reforms since 2021, focusing on its pharmaceutical core business, resulting in accelerated growth [6][22]. - In 2023, the company achieved total revenue of 1.629 billion RMB, with a compound annual growth rate (CAGR) of 8% from 2020 to 2023 [22]. 2. Product Matrix and Growth Areas - The company has a diverse product portfolio across several therapeutic areas, with significant revenue contributions from cardiovascular, orthopedic, pediatric, respiratory, gynecological, and anti-infection drugs, accounting for 79% of total revenue in 2023 [6][22]. - The orthopedic segment is expected to see substantial growth, with projected revenue CAGR of 22% from 2024 to 2026 [12][58]. - The cardiovascular segment is also expected to grow steadily, with a projected CAGR of 17% during the same period [12][58]. 3. Financial Forecast and Valuation - The company forecasts net profits of 244 million RMB, 296 million RMB, and 366 million RMB for 2024, 2025, and 2026, respectively, with growth rates of 30.7%, 21.2%, and 23.7% [4][13][22]. - The current price-to-earnings (PE) ratios are projected to be 18x, 15x, and 13x for the years 2024, 2025, and 2026 [13][22].