TRT(600085) 华创证券·2024-11-03 15:41Investment Rating - The report maintains a "Recommend" rating for Tongrentang (600085) with a target price of 50.4 RMB, compared to the current price of 40.40 RMB [1] Core Views - Tongrentang achieved steady revenue growth but faced cost pressures in 1-3Q24, with revenue of 13.82 billion RMB (+0.7% YoY) and net profit of 1.35 billion RMB (-3% YoY) [1] - The company's subsidiaries showed mixed performance: the pharmaceutical segment remained stable, while the commercial and traditional medicine segments were under pressure [1] - The report expects Tongrentang's net profit to grow at a CAGR of 15% from 2024 to 2026, reaching 2.28 billion RMB by 2026 [1] Financial Performance - 3Q24 revenue was 4.06 billion RMB (+2.4% YoY), with net profit declining 19% YoY to 330 million RMB due to gross margin pressure and increased operating expenses [1] - Gross margin in 3Q24 decreased by 3.5 percentage points YoY, with net profit margin down 4 percentage points [1] - Accounts receivable increased to 1.59 billion RMB in 3Q24, while contract liabilities slightly decreased to 470 million RMB [1] Subsidiary Performance - Tongrentang Technology reported 1-3Q24 revenue of 5.48 billion RMB (+2.7% YoY) and net profit of 550 million RMB (+6.3% YoY), with gross margin declining 3 percentage points to 39.7% [1] - The commercial group was affected by weak consumer demand and policy changes [1] Valuation and Projections - The report forecasts 2024-2026 revenue of 18.23/20.43/22.89 billion RMB, with YoY growth rates of 2.1%/12.1%/12.1% [2] - Net profit is projected to reach 1.72/1.98/2.28 billion RMB in 2024-2026, with EPS of 1.25/1.44/1.66 RMB [2] - The target PE ratio of 35x for 2025 implies a target price of 50.4 RMB [1] Industry Context - The report focuses on the traditional Chinese medicine sector, where Tongrentang is a leading player [3] - The company's performance is analyzed in the context of broader market trends and consumer demand patterns [1] Historical Performance - In 2023, Tongrentang achieved revenue of 17.86 billion RMB (+16.2% YoY) and net profit of 1.67 billion RMB (+17.0% YoY) [2] - The company's 12-month stock price range was 31.21-54.90 RMB, with a current market capitalization of 55.41 billion RMB [3]