Shanghai Pharma(SH:601607) Xiangcai Securities·2024-10-17 02:08Investment Rating - The report assigns an "Accumulate" rating for Shanghai Pharmaceuticals, marking its first coverage [2][28]. Core Views - Shanghai Pharmaceuticals is a leading integrated pharmaceutical company in China, with a comprehensive industrial layout and steady performance. The company reported a revenue of CNY 260.3 billion in 2023, a year-on-year increase of 12%. However, the net profit attributable to shareholders decreased by 33% to approximately CNY 3.768 billion, primarily due to one-time asset impairments and antitrust fines [2][8]. - The company has a strong commercial revenue stream, with sales reaching approximately CNY 234.04 billion in 2023, reflecting a growth of 14.04%. The distribution business accounted for CNY 233.76 billion, while retail business contributed CNY 9.111 billion [2][4]. - The report highlights the company's strategic focus on large product categories in the pharmaceutical industry, which is expected to drive steady growth in the coming years [28]. Summary by Sections Recent Performance - Over the past 12 months, the company's relative return was -11% over one month, -2% over three months, and +9% over twelve months compared to the CSI 300 index. Absolute returns were +11%, +9%, and +14% respectively [1]. Financial Performance - In 2023, the company achieved a total revenue of CNY 260.3 billion, with a year-on-year growth of 12%. The net profit attributable to shareholders was CNY 3.768 billion, down 33% year-on-year. Excluding one-time losses, the adjusted net profit was CNY 4.919 billion, reflecting a growth of 2.99% [2][10]. - The gross margin has declined from 14.2% in 2018 to 11.4% in 2023, primarily due to the increasing proportion of lower-margin commercial business [3]. Business Segments - The commercial segment generated approximately CNY 234.04 billion in revenue in 2023, with a growth rate of 14.04%. The distribution business grew by 13.62%, while retail business grew by 10.25% [4][5]. - The industrial segment reported a revenue of CNY 26.257 billion, a decrease of 1.87% year-on-year. The Chinese medicine sector within the industrial segment saw a revenue increase of 10.3% [6]. Innovation and R&D - The company is enhancing its R&D efforts, focusing on a diversified innovation system that includes self-research, mergers, and incubation. In 2023, significant progress was made in the innovative drug pipeline, with multiple products entering late-stage clinical trials [7][26]. Future Projections - The report forecasts revenues for 2024, 2025, and 2026 to be CNY 290.1 billion, CNY 321.4 billion, and CNY 353.8 billion respectively, with net profits projected at CNY 4.803 billion, CNY 4.896 billion, and CNY 5.173 billion [8][28].