HWHG(SH:600079) Soochow Securities·2024-08-13 14:30Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Views - The company is positioned as a leader in the anesthetic drug market, with a strong focus on core operations and sustainable growth momentum [1][3]. - The anesthetic drug market is expected to continue expanding due to various factors, including an aging population and increasing surgical procedures [3][34]. - The company’s core subsidiary, Yichang Renfu, significantly contributes to revenue and profit, with a market share exceeding 90% in the fentanyl series [3][4]. Summary by Sections 1. Company Overview - Renfu Pharmaceutical Group, established in 1993 and listed in 1997, is a leading enterprise in Hubei Province and ranks among China's top 30 pharmaceutical companies [11]. - The company has undergone several phases, including initial establishment, expansion, and a recent focus on core operations, leading to the optimization of its business structure [11][13]. 2. Market Dynamics - The anesthetic drug market in 2023 exceeded 25 billion yuan, with a diverse range of products and a long lifecycle due to high regulatory barriers [3][25]. - The market is driven by factors such as the increasing number of surgical procedures, which have a CAGR of 10% from 2015 to 2021, and the growing acceptance of pain management practices [3][34]. 3. Financial Performance - The company’s revenue is projected to grow from 26.29 billion yuan in 2024 to 31.15 billion yuan in 2026, with net profit expected to rise from 2.22 billion yuan to 3.08 billion yuan during the same period [4]. - The current stock price reflects a P/E ratio of 15x for 2024, indicating that the company is undervalued compared to its growth potential [4]. 4. Subsidiary Contributions - Yichang Renfu is the core subsidiary, contributing 33% of total revenue and 91% of net profit in 2023, with a strong growth trajectory [3][15]. - The company is expanding its product offerings, including oral formulations and new anesthetic drugs, to capture additional market share [3][4]. 5. Innovation Pipeline - The company has a promising innovation pipeline, with pUDK-HGF completing Phase III clinical trials, targeting a market potential of over 100 billion yuan [3][4]. - Other subsidiaries are also showing steady growth, contributing to the overall stability and expansion of the company [3][4].