huahaipharm(SH:600521) Huachuang Securities·2024-09-02 01:23Investment Rating - The report maintains a "Strong Buy" rating for Huahai Pharmaceutical (600521) with a target price of 26.3 CNY, compared to the current price of 16.83 CNY [1][2]. Core Views - The company achieved record high quarterly performance in Q2 2024, with revenue of 26.30 billion CNY (+17.65%) and net profit of 4.78 billion CNY (+20.67%) [1][2]. - The report highlights a strong recovery in the raw materials segment, with revenue of 18.93 billion CNY (+19.5%) and a gross margin of 49.3% (+5.6 percentage points) in H1 2024 [2]. - The domestic formulation business is a key growth driver, with overall revenue of 31.46 billion CNY (+18.7%) and a gross margin of 69.9% (-0.3 percentage points) in H1 2024 [2]. Financial Summary - Total revenue for 2023 is projected at 8,309 million CNY, with expected growth to 10,546 million CNY in 2024 (+26.9%) [3]. - The net profit for 2023 is estimated at 830 million CNY, with a significant increase to 1,312 million CNY in 2024 (+58.0%) [3]. - Earnings per share (EPS) is expected to rise from 0.57 CNY in 2023 to 0.89 CNY in 2024 [3]. Business Segments - The raw materials segment is expected to continue its growth trajectory, driven by the stabilization of core product prices and expansion into new markets [2]. - The domestic formulation segment is anticipated to grow by 25-30% in 2024, supported by new product launches and market expansion efforts [2]. - The overseas formulation segment remains stable, with revenue from the U.S. market at 720 million CNY, showing no significant change year-on-year [2]. Valuation - The report suggests a valuation premium due to the company's strong growth prospects and leading position in advanced pharmaceutical manufacturing, applying a 30x PE ratio for 2024 [2].