HUADONG MEDICINE(000963) ZHONGTAI SECURITIES·2024-10-30 03:00Investment Rating - The report assigns a "Buy" rating for Huadong Medicine (000963.SZ) for the first time [2][5]. Core Views - Huadong Medicine is positioned at a critical stage where its pharmaceutical and medical aesthetics sectors are expected to enter a rapid growth phase, leveraging its strong commercial resources accumulated from its generics sales [3][4]. - The company has achieved a compound annual growth rate (CAGR) of 8% in revenue and 11% in net profit from 2021 to 2023, indicating robust performance [10]. - The report anticipates revenue of 431 billion yuan, 462 billion yuan, and 488 billion yuan for 2024, 2025, and 2026 respectively, with net profits of 36 billion yuan, 43 billion yuan, and 52 billion yuan for the same years [5][3]. Summary by Sections Company Profit Forecast and Valuation - Revenue (in million yuan) is projected to grow from 40,624 in 2023A to 48,751 in 2026E, with a year-on-year growth rate of 8%, 6%, 7%, and 5% respectively [1]. - Net profit (in million yuan) is expected to increase from 2,839 in 2023A to 5,173 in 2026E, with a year-on-year growth rate of 14%, 28%, 19%, and 20% respectively [1]. - Earnings per share (in yuan) are forecasted to rise from 1.62 in 2023A to 2.95 in 2026E [1]. Pharmaceutical Industry - The pharmaceutical segment has completed its bottoming process, with innovative products entering the monetization phase. Key products include Bailing capsules and Acarbose tablets, which have faced price reductions and increased competition [10][15]. - The company has made significant strides in R&D, with a focus on chronic diseases and oncology, and has several innovative products in the pipeline [15][22]. Medical Aesthetics - The medical aesthetics business has shown rapid growth, with a comprehensive product line that includes over 40 high-end aesthetic products, of which 26 are already launched [25][26]. - The company has established a strong presence in the medical aesthetics market through strategic acquisitions and partnerships, enhancing its product offerings in non-surgical aesthetic procedures [25][26]. Investment Theme - Huadong Medicine is leveraging its extensive experience in the pharmaceutical industry to optimize its business structure, focusing on high-margin sectors such as manufacturing and medical aesthetics [4][10].