YUNNAN BAIYAO(000538) 招商证券·2024-08-12 05:30Investment 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]