Lushang Freda Pharmaceutical (SH:600223) Minsheng Securities·2024-10-31 12:03Investment Rating - The report maintains a "Recommended" rating for the company [4]. Core Views - The company has experienced a decline in revenue and net profit in the first three quarters of 2024, with revenue at 2.803 billion yuan, down 17.45% year-on-year, and net profit at 171 million yuan, down 28.09% year-on-year. However, the adjusted net profit increased by 40.09% year-on-year [2]. - The cosmetics business is under pressure, but the Yilian brand shows relative resilience, with revenue growth in the first three quarters of 2024 at 3.25% and a slight decline of 4.86% in Q3 [2]. - The pharmaceutical business has stabilized, with revenue in Q3 showing an 18.96% increase year-on-year, indicating a recovery in sales after price adjustments [2]. - The company is focusing on high-quality development across its pharmaceutical, cosmetics, and raw materials businesses, with expectations for improved profitability following the divestment of its real estate business [2]. Summary by Sections Financial Performance - For the first three quarters of 2024, the company achieved a revenue of 2.803 billion yuan, a decrease of 17.45% year-on-year, and a net profit of 171 million yuan, down 28.09% year-on-year. The adjusted net profit was 151 million yuan, up 40.09% year-on-year [2]. - In Q3 alone, revenue was 877 million yuan, down 4.82% year-on-year, and net profit was 44 million yuan, down 7.76% year-on-year [2]. Business Segments - The cosmetics segment generated revenue of 1.708 billion yuan in the first three quarters, with a slight increase of 3.25% year-on-year, while Q3 revenue was 522 million yuan, down 4.86% year-on-year. The Yilian brand showed resilience with a 7.57% increase in revenue for the first three quarters [2]. - The pharmaceutical segment reported revenue of 370 million yuan in the first three quarters, down 7.42% year-on-year, but Q3 saw an 18.96% increase, indicating a recovery [2]. - The raw materials and additives segment generated revenue of 249 million yuan in the first three quarters, down 1.96% year-on-year, with a 12% increase in sales of food-grade and cosmetic-grade hyaluronic acid [2]. Profitability and Cost Management - The company's gross margin for the first three quarters was 51.85%, an increase of 4.77 percentage points year-on-year. The net profit margin was 6.11%, down 0.90 percentage points year-on-year [2]. - The sales expense ratio was 36.47% for the first three quarters, up 4.43 percentage points year-on-year, while the management expense ratio decreased [2]. Future Outlook - The company is expected to achieve net profits of 291 million yuan in 2024, with a projected growth of 27.3% in 2025 and 21.8% in 2026. The corresponding PE ratios are forecasted to be 24, 19, and 15 for the respective years [3][5].