Hunan Jiudian Pharmaceutical (SZ:300705) SINOLINK SECURITIES·2024-07-30 04:02Investment Rating - The report assigns a "Buy" rating to the company with a target price of 26.40 RMB, based on a 25x PE for 2024, corresponding to a market value of 128.5 billion RMB [27]. Core Insights - The company has experienced rapid growth, with a compound annual growth rate (CAGR) of approximately 32% in net profit from 2017 to 2023, reaching 368 million RMB in 2023, a year-on-year increase of 36.5% [25][109]. - The company's main product, the Loxoprofen Sodium Gel Patch, has become a significant revenue generator, exceeding 1.5 billion RMB in annual sales, and is expected to maintain a favorable competitive landscape in the short term [27][73]. - The company is expanding its product pipeline, with multiple products submitted for production approval, including innovative traditional Chinese medicine products, which are anticipated to contribute to future growth [27][126]. Summary by Sections Company Overview - The company has developed an integrated business model encompassing high-end raw materials, formulations, and medicinal excipients, achieving significant revenue growth [25][105]. Financial Performance - The company's revenue has grown from 535 million RMB in 2017 to 2.693 billion RMB in 2023, with a CAGR of 31% [109]. - The net profit for 2024 Q1 was 126 million RMB, reflecting a year-on-year increase of 63.4% [109]. Product Analysis - The Loxoprofen Sodium Gel Patch is positioned as a first-line treatment for osteoarthritis pain, with a substantial potential patient population due to the high prevalence of osteoarthritis among individuals over 40 years old in China [20]. - The company has successfully entered the national medical insurance directory with its Ketoprofen Gel Patch, which is expected to drive additional revenue growth [27][73]. Market Dynamics - The company has been included in various national procurement programs, which have led to price reductions but are expected to optimize sales expenses and enhance product volume in hospitals [26][73]. - The company is actively expanding its presence in the outpatient market, with a notable increase in outpatient sales from 5.84% in 2023 to 17.66% in Q1 2024 [26][73]. Future Outlook - The company anticipates continued growth in net profit, projecting figures of 514 million RMB, 661 million RMB, and 817 million RMB for 2024, 2025, and 2026, respectively, with corresponding year-on-year growth rates of 39.5%, 28.6%, and 23.6% [27][49].