YILING PHARMACEUTICAL(002603) 国投证券·2024-08-28 17:00Investment Rating - The report assigns a "Buy-A" rating to Yiling Pharmaceutical (002603 SZ) with a 6-month target price of 17 00 yuan, implying a 25x forward P/E ratio for 2024 [6][10] Core Views - Yiling Pharmaceutical's H1 2024 performance was under pressure due to high base effects from the previous year, with revenue declining 32 19% YoY to 4 604 billion yuan and net profit dropping 66 97% YoY to 530 million yuan [2][3] - The company's cardiovascular drug sales fell 7 86% YoY to 2 314 billion yuan, while respiratory drug sales plunged 58 42% YoY to 1 284 billion yuan due to lower demand and high inventory levels [3] - Gross margin declined 8 37 percentage points YoY to 53 37% in H1 2024, mainly due to rising raw material costs and lower capacity utilization [4] - R&D investment remained strong at 411 million yuan, accounting for 8 92% of revenue, with several innovative drugs in the pipeline [5][9] Financial Performance - Q2 2024 revenue declined 27 10% YoY to 2 082 billion yuan, with net profit down 43 86% YoY to 227 million yuan [2] - Operating margin fell to 14 9% in H1 2024 from 17 2% in 2023, while net margin dropped to 11 6% from 13 1% [11] - The company's ROE declined to 9 3% in H1 2024 from 11 8% in 2023, reflecting weaker profitability [11] Product Pipeline - Yiling Pharmaceutical has 2 innovative drugs in the NDA stage (Qifang Bitong Tablets and Chaihuang Lidan Capsules) and 2 in Phase III clinical trials (Luobitong Tablets and Pediatric Lianhua Qinggan Granules) [9] - The company has 4 innovative drugs in Phase II clinical trials, covering cardiovascular, respiratory, and other therapeutic areas [9] Valuation - The report forecasts 2024-2026 revenue of 9 856 billion yuan, 11 152 billion yuan, and 12 447 billion yuan, respectively [10] - Net profit is expected to grow to 1 139 billion yuan in 2024, 1 434 billion yuan in 2025, and 1 689 billion yuan in 2026 [10] - The stock trades at 22 2x 2024E P/E, 17 7x 2025E P/E, and 15 0x 2026E P/E [10][11]