YUNNAN BAIYAO(SZ:000538) Haitong Securities·2024-09-09 07:41Investment Rating - The investment rating for the company is "Outperform the Market" and is maintained [1]. Core Views - The company reported a revenue of 20.455 billion yuan for the first half of 2024, a year-on-year increase of 0.72%, with a net profit attributable to shareholders of 3.189 billion yuan, up 12.76% year-on-year [4]. - The health product segment continues to enhance profitability, with a revenue of 3.144 billion yuan and a net profit of 1.231 billion yuan, reflecting a growth of 1.7% year-on-year [5]. - The pharmaceutical segment achieved a revenue of 4.069 billion yuan, a year-on-year increase of 9.6%, with core products showing significant growth [5]. - The company is strengthening its innovation and research capabilities, focusing on both short-term and long-term projects to ensure sustainable development [5]. Financial Performance - The company expects revenues to grow from 39.111 billion yuan in 2023 to 47.249 billion yuan in 2026, with a compound annual growth rate (CAGR) of approximately 6.9% [6][10]. - Net profit is projected to increase from 4.094 billion yuan in 2023 to 5.632 billion yuan in 2026, with a CAGR of about 10.7% [6][10]. - The gross margin is expected to improve slightly from 26.5% in 2023 to 26.9% in 2026 [10]. Profitability and Efficiency - The company reported a sales gross margin of 29.30% for the first half of 2024, an increase of 1.75 percentage points year-on-year [7]. - The net profit margin for the first half of 2024 was 15.59%, reflecting an increase of 1.67 percentage points year-on-year [7]. - The company maintains a stable expense ratio, with the sales expense ratio at 11.23% and the management expense ratio at 1.60% [7]. Valuation - The company is expected to trade at a price-to-earnings (P/E) ratio of 23-28 times for 2024, corresponding to a reasonable value range of 59.80 to 72.80 yuan per share [7]. - The average P/E ratio of comparable companies is around 22-28 times, indicating a potential premium for the company's brand and product matrix [9].