Fangsheng Pharmaceutical(603998) 申万宏源·2024-12-10 01:36Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [3][6][11]. Core Insights - The company, Fangsheng Pharmaceutical, focuses on innovative traditional Chinese medicine and aims to develop a diverse product matrix targeting various therapeutic areas, including cardiovascular, orthopedic, respiratory, and pediatric medicine [3][5][47]. - The company has implemented a "338 Major Product Development Plan" to create three products with over 1 billion yuan in sales, three products with over 500 million yuan, and eight products exceeding 100 million yuan within the next 5-10 years [4][47]. - The company has shown strong revenue growth in recent quarters, with a projected revenue increase of 11.6% in 2024, 14.0% in 2025, and 16.3% in 2026 [6][11]. Summary by Sections 1. Innovative Empowerment and Diverse Development - Fangsheng Pharmaceutical is a large health industry group established in 2002, focusing on innovative traditional Chinese medicine [3][37]. - The company has built a robust product portfolio through self-development and mergers, concentrating on core pharmaceutical operations while divesting non-pharmaceutical businesses [3][37]. 2. Growth Trajectory - The company has initiated the "338 Major Product Development Plan" to enhance its growth trajectory, emphasizing new drug research and development capabilities [4][69]. - The company aims to strengthen its market presence through academic promotion and terminal coverage, creating a secondary growth curve after achieving stable market share in hospitals [69]. 3. Financial Forecast and Valuation - The company forecasts revenues of 18.18 billion yuan in 2024, 20.72 billion yuan in 2025, and 24.09 billion yuan in 2026, with corresponding net profits of 2.62 billion yuan, 3.13 billion yuan, and 3.66 billion yuan [6][11]. - The report estimates a reasonable market value of 60 billion yuan based on a 23x PE ratio for 2024, indicating a 22% upside potential from the current market capitalization of 49 billion yuan [6][11]. 4. Product Matrix and Market Focus - The company has a rich product matrix focusing on cardiovascular, orthopedic, respiratory, pediatric, gynecological, and anti-infection medications [5][47]. - Key products include the pediatric cough granules, orthopedic health products, and cardiovascular medications, which are expected to drive significant revenue growth [5][56]. 5. Research and Development - The company has increased its R&D investment, with R&D expenses reaching 1.03 billion yuan in the first three quarters of 2024, accounting for 7.67% of revenue [64]. - The company is actively developing 13 innovative traditional Chinese medicine projects across various therapeutic areas, enhancing its product pipeline [64][65].