Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 8.67, representing a potential upside of 47% from the current price of HKD 5.90 [1][7][14]. Core Insights - The company has demonstrated continuous rapid growth, with a mid-year revenue of RMB 1.269 billion in 2024, reflecting a year-on-year increase of 13.3%, and a net profit of RMB 398 million, up 14.9% year-on-year. Since its listing in 2013, the company has achieved a compound annual growth rate (CAGR) of 16.3% in revenue and 17.8% in net profit, showcasing its strong product and management capabilities [5][9]. - The company focuses on the nephrology and imaging sectors, with a rich pipeline of products including 6 innovative drugs and 6 generic drugs. It has 8 products under development in nephrology, with significant market opportunities [6][13][14]. - The company has a robust financial structure, with cash and cash equivalents reaching RMB 3.581 billion and a reduction in accounts receivable by 8.7% year-on-year, indicating improved operational efficiency [9]. Summary by Sections Financial Performance - For the first half of 2024, the company reported revenue of RMB 1.269 billion, a 13.3% increase year-on-year, and a net profit of RMB 398 million, up 14.9% year-on-year. The company has distributed over HKD 2.4 billion in dividends to shareholders, with a mid-year dividend of HKD 0.30 per share, compared to HKD 0.15 in the same period last year [5][9]. - The company has improved its cash flow management, with accounts receivable turnover days decreasing to 34.7 days, down from 36.3 days in 2023 [9]. Product Competitiveness - The core products in nephrology, including "Uremia Clear" and "Yishen Huashi Granules," generated sales of RMB 883 million, a growth of 11.1% year-on-year, with "Yishen Huashi Granules" sales increasing by 34.7% [6][11]. - The company has expanded its market reach, covering 42,000 medical institutions and 280,000 pharmacies, and has seen a 28.7% increase in revenue from its pediatric and women's health products [6][11]. Market and Industry Context - The Chinese government is strongly supporting the development of traditional Chinese medicine, enhancing the strategic position of the industry. Policies such as the "14th Five-Year Plan for the Development of Traditional Chinese Medicine" are expected to drive growth and standardization in the sector [12].
康臣药业：业绩持续快速增长，肾科中药龙头价值低估