ZZPZH(SH:600436) Southwest Securities·2024-07-29 13:30Investment Rating - The report assigns a "Buy" rating to the company with a target price of 254.80 CNY over the next six months, based on the current price of 207.00 CNY [1]. Core Insights - The company reported a total revenue of 5.65 billion CNY for the first half of 2024, representing a year-on-year increase of 11.99%. The net profit attributable to shareholders was 1.72 billion CNY, up 11.6% year-on-year [2]. - The growth in revenue is attributed to enhanced market planning and the expansion of sales channels, particularly in the beauty product segment, which saw a significant increase in sales [2]. - The rising price of natural cow bile has exerted pressure on gross margins, but potential easing of cost pressures is anticipated due to new import policies [2]. - The company is actively investing in innovative research and development, achieving significant milestones in new drug approvals and clinical trials [2]. Summary by Sections Financial Performance - For the first half of 2024, the company achieved total revenue of 5.65 billion CNY, a year-on-year increase of 11.99%. The net profit attributable to shareholders was 1.72 billion CNY, reflecting an 11.6% increase year-on-year [2]. - The operating profit for the first half of 2024 was 2.06 billion CNY, with a slight decline in operating profit margin due to rising costs of key raw materials [2]. Sales and Market Strategy - The company has expanded its sales channels significantly, with over 100,000 terminal stores covered through partnerships with major pharmacy chains. The beauty product segment saw a revenue increase of 83.18% in the first quarter of 2024 [2][8]. - The company has upgraded its brand image by transforming all "Pian Zai Huang Experience Halls" into "Pian Zai Huang National Medicine Halls" [2]. Cost and Margin Analysis - The price of natural cow bile has surged from 200,000 CNY per kilogram at the beginning of 2023 to a peak of 1.65 million CNY per kilogram in June 2024, leading to increased cost pressures [2]. - New import policies are expected to alleviate some of the cost pressures associated with natural cow bile, potentially improving profit margins [2]. Research and Development - The company has made significant progress in R&D, obtaining clinical licenses for new drugs and advancing multiple projects into critical research phases [2][8]. - The company is exploring clinical advantages of its products in various therapeutic areas, including liver disease and oncology [2]. Profit Forecast and Valuation - The forecast for net profit attributable to shareholders for 2024-2026 is 3.29 billion CNY, 3.84 billion CNY, and 4.49 billion CNY, respectively, with corresponding PE ratios of 38, 33, and 28 [3][9]. - Given the competitive landscape and expected cost reductions, the company is assigned a valuation premium, leading to a target price of 254.80 CNY based on a 40x PE for 2025 [2][9].