ZUO LI YAO YE(SZ:300181) Xiangcai Securities·2024-08-22 03:39Investment Rating - The investment rating for the company is "Buy" [2][7]. Core Insights - The company's core products are maintaining steady growth, with significant revenue contributions from the unique Wuling series products [3][4]. - The company achieved a revenue of 1.428 billion yuan in H1 2024, representing a year-on-year growth of 41.21%, and a net profit of 296 million yuan, up 49.78% year-on-year [3]. - The rapid growth of traditional Chinese medicine (TCM) decoction pieces has become a new growth driver for the company, with H1 2024 revenue growth of 57.11% [5][6]. Financial Performance - In H1 2024, the Wuling series products generated 836 million yuan in revenue, accounting for 58.56% of total revenue and 81.14% of gross profit [3]. - The company expects revenues of 2.388 billion yuan, 2.926 billion yuan, and 3.503 billion yuan for the years 2024, 2025, and 2026, respectively, with net profits projected at 498 million yuan, 643 million yuan, and 794 million yuan [7][9]. - The gross margin is expected to improve from 68.4% in 2023 to 71.3% by 2026 [9]. Product Analysis - The Wuling series products, including Wuling capsules, are unique and have shown a consistent average growth rate of 26% from 2020 to 2023 [3]. - The Bailing series products are recovering, with H1 2024 revenue of 82 million yuan, a decrease of 16.59%, but the decline is narrowing [4]. - The company has over 1,000 varieties of TCM decoction pieces and has established more than 100 cooperative TCM material planting bases [5][6]. Market Strategy - The company is adopting a comprehensive sales model combining self-operated and commissioned sales across hospital, OTC, and online channels [4]. - The marketing strategy upgrade has shown significant effects, leading to increased sales in OTC and online markets [7].